UK Economic Forecast, Analysis, and GDP Growth of 2016

The United Kingdom’s economy continues to hold up well. A complete set of data confirmed that GDP growth had decelerated marginally in the third quarter, but that growth remains robust compared to historical levels. The economy was supported by a rebound in exports while domestic demand disappointed. Economic activity is performing well as the smooth political transition following the resignation of former Prime Minister David Cameron and the accommodative stimulus of the Central Bank are keeping consumer and business confidence at reasonable levels. However, the depreciation of the pound, rising inflation and insufficient wage hikes risk eroding household consumption. Last month, Finance Minister Philip Hammond delivered the first budget statement after the referendum. In the next five years, the government projects higher borrowing and a slower fiscal consolidation compared to the previous budget.

United Kingdom Economy Data

2011 2012 2013 2014 2015
Population (million) 63.3 63.7 64.1 64.5 64.9
GDP per capita (USD) 41,049 41,436 42,366 46,412 43,890
GDP (USD bn) 2,598 2,640 2,715 2,994 2,850
Economic Growth (GDP, annual variation in %) 2.0 1.2 2.2 2.9 2.3
Domestic Demand (annual variation in %) -0.2 2.1 2.4 3.4 2.3
Consumption (annual variation in %) 0.1 1.8 1.9 2.5 2.7
Investment (annual variation in %) 2.0 1.5 2.6 7.3 4.1
Exports (G&S, annual variation in %) 5.8 0.7 1.2 1.2 5.1
Imports (G&S, annual variation in %) 0.6 2.9 2.8 2.4 6.3
Industrial Production (annual variation in %) -0.6 -2.8 -0.8 1.3 1.0
Retail Sales (annual variation in %) 0.0 0.6 1.4 4.0 4.5
Unemployment Rate 8.1 8.0 7.6 6.2 5.4
Fiscal Balance (% of GDP) -7.7 -8.3 -5.6 -5.6 -4.4
Public Debt (% of GDP) 81.8 85.3 86.2 88.2 89.2
Money (annual variation in %) 3.0 5.5 5.4 6.2 5.9
Inflation Rate (CPI, annual variation in %, eop) 4.2 2.7 2.0 0.5 0.2
Inflation Rate (CPI, annual variation in %) 4.5 2.8 2.6 1.5 0.0
Inflation (PPI, annual variation in %) 4.7 2.1 1.3 0.0 -1.7
Policy Interest Rate (%) 0.50 0.50 0.50 0.50 0.50
Stock Market (annual variation in %) -5.6 5.8 14.4 -2.7 -4.9
Exchange Rate (vs USD) 1.55 1.63 1.66 1.56 1.47
Exchange Rate (vs USD, aop) 1.60 1.59 1.56 1.65 1.53
Current Account (% of GDP) -1.7 -3.3 -4.5 -5.1 -5.2
Current Account Balance (GBP bn) -27.4 -54.7 -77.9 -92.5 -96.2
Trade Balance (GBP billion) -93.5 -106.5 -115.2 -123.1 -125.4
International Reserves (USD) 79.3 88.6 92.4 95.7 119

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