This is the first issue of the Global Counsel Brexit dashboard. 21 months on from the vote – and with just 12 months before the UK leaves the EU – we can now take the macro pulse of the economy, using a balanced set of 15 indicators, each quarter. We are not attempting to isolate the impact of Brexit from all the other factors affecting the economy, as that is near impossible. Instead, we are providing a health check, to see where the economy is faring better or worse, compared to the years before the vote.
The headline message this quarter is of diverging fortunes and prospects for the British economy. While the services sector is struggling, industry is doing better. And while consumers and businesses are both feeling the squeeze, there are signs that the outlook for investment is now steadier.
Households saw real earnings fall during most of 2017, with only the first signs of a recovery in December. This has been matched by pressure on the high street, with sluggish retail sales and an even sharper drop in consumer durables spending. This bares an uncanny resemblence to the first years of the Cameron government, when household finances came under sustained pressure. The outlook for investment is better, with respectable growth in the second half of last year and signs that policy uncertainty may be falling.
Industry has been outperforming services since the middle of last year, which is a role reversal we have not seen in a sustained way since 2010. Growth in goods exports, helped by the fall in the pound and the brighter outlook for the global economy, helps explain this.
We also see a mixed picture for the people indicators we look at. We are now seeing a drop in both net migration and visitors from the EU, suggesting the UK may be less attractive as a destination. But we are only seeing early signs that this may be impacting on vacancies in the health and social work sector.