Uncertainty over Brexit is holding economy back - The Yorkshire Post says

The economy has shrunk according to latest figures. Photo: Joe Giddens/PA
The economy has shrunk according to latest figures. Photo: Joe Giddens/PA

THE atmosphere of gloom that is surrounding the economy has been intensified by the worrying slowdown revealed in the latest figures on gross domestic product for the second quarter of this year.

GDP has shrunk for the first time since 2012, which is worse than economists had predicted, and caused sterling to fall in value.

Is Brexit uncertainty holding growth back? Photo: Stefan Rousseau/PA.

Is Brexit uncertainty holding growth back? Photo: Stefan Rousseau/PA.

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They had expected the economy to be flatlining, but for output to have dropped is a matter of grave concern for both business and the Government.

One reason for the depth of that concern is the economic sectors affected.

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Manufacturing and construction, both fundamental to the health of the economy, have weakened significantly and normally buoyant services showed no sign of growth.

The question is now whether Britain risks entering a recession. The Bank of England thinks not, and it is very much to be hoped that its forecast is correct. Behind the figures, a number of factors are in play.

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Growth has slowed globally, and Britain is not immune from that. But above all, what is holding the economy back is the continuing uncertainty over Brexit. The CBI is right to point out that this is undermining business confidence and affecting investment decisions.

Until the method and manner of how Britain exits the EU is settled, there is a real risk of further decline.

As matters stand, the face-off between the Government and Europe over a new round of negotiations offers no prospect of giving business the certainty it needs nor the economy vital new impetus.