Official data released on Thursday showed that the UK’s economy is further behind in the global recovery process than originally thought, posing a challenge to the country as it prepares to leave the European Union and to become more economically independent. The UK’s gross domestic product (GDP) contracted to a quarterly 0.4 percent, lower than the prevailing 0.5 percent estimates. Still, even a 0.4 percent GDP is more than analysts originally expected when the plan to leave the EU was first approved.
The UK saw a year-on-year economic growth of 1.4 percent in Q4 2017, the weakest performance in five years and the weakest performance among the world’s leading economies (also known as the G7 or Group of Seven economies).
The data is particularly difficult to digest because the UK has been relying on it’s strong economy to support future economic growth, a possibility which may be more difficult in light of the newly-realized reality. Analysts and UK residents continue to wonder when the next rate hike will be, with May deemed the most likely opportunity for the next hike and with one more interest rate hike before 2018 comes to a close.
The Bank of England predicts that the country’s economy will grow at an annualized rate of 1.8 percent in 2018, up from previous estimates of 1.6 percent. The pound was down 0.40 percent against the dollar as of 11:44 a.m. GMT, to $1.3863. The pound was also lower against the euro, trading at 0.8858.