'You don't raise interest rates when unemployment rises' – experts debate Brexit watch data

The UK economy is currently feeling the pull of two opposing forces. The strength of the global economy and healthy growth in other European economies is boosting growth in export-oriented sectors. This is confirmed by robust manufacturing growth recorded in both official data and the CBI’s latest industrial trends survey.

Meanwhile, consumers continue to be squeezed by high inflation while Brexit uncertainty is holding back business investment. Consumer indicators, including the latest retail sales data, point to very sluggish growth in household spending.

Over the crucial Christmas and New Year period from November to January, retail sales volumes increased by just 0.1% on the previous three months, adjusted for seasonal factors. Car sales in January were 6.3% down on a year ago, with private sales nearly 10% below a year ago.

The services sector, which is more reliant on domestic spending, is therefore acting as a drag on UK economic growth. This is being reflected in slower employment growth over the second half of last year and a slight rise in the unemployment rate from 4.3%to 4.4%.

Source: theguardian