UK Economic Data Falls
The surprise index for the UK has taken a noticeable turn lower, the methodology for the surprise index tracks actual data against previous and expected figures. Following the vote to leave the EU most economists expected a drop in the UK economy however that did not happen and the British economy, fueled by its consumers, fired ahead. Since a high in Mid may the surprise index has turned lower and retraced much of the advance from earlier in the year.
This means that published data has been coming out below expectation and below previous levels. The one piece of data still registering as positive is inflation, the latest figure of 2.9% registered as positive but will start to register as negative should it get above 3%. That high inflation is really quite negative, with public sector workers having their pay rise pegged at 1% a 2.9% inflation rate means a cut in real income which will inevitably lead to a drop in consumer spending.
The UK appears to be heading for a worst case scenario of no trade deals post Brexit, the speed of negotiation is incredibly slow months of time was wasted because of the Uk general election and even more time wasted by the arrogance of the British politicians incorrectly thinking that Europe needs a deal more than the UK. It is that type of arrogance that caused the leave vote in the first place. It is worth noting that since the Brexit vote the EU has signed free trade deals with Canada and Japan, the UK on the other hand is still concerned with ripping up its only trade deal. This headline from the Ft sums it up.