Great Britain: Industry, GDP, inflation, interest rates – a status report

We received the latest economic data from Great Britain today. Gross domestic product has recently grown by 1.1% year-on-year, which is still quite respectable. The following chart shows the growth rate of UK GDP over the last five years. The trend is negative.


For the last five years, too, industrial production in Great Britain has now followed suit. In August, it fell by 1.8% year-on-year. Unlike in mainland Europe (only recently), the trend in the UK has been downwards for a good two years now. For more than a year now, British industry has been producing almost nothing but declining sales.


The following chart shows the inflation trend over the last five years. For the past two years we have seen a downward trend for the UK.


And now we are looking at the Bank of England’s key interest rate trend for five years. In the wake of imported inflation (weak Pound because of Brexit), the key rate rose to 0.75%, where it has remained since July.


The next interest rate decision by the Bank of England is scheduled for 7th of November. Economic weakness, industry more than just weakness, inflation under control? Can interest rates be lowered to counteract the Brexit crisis, which threatens to further weaken the British economy? Probably at the end of October (but you never know) the UK will leave the EU. And perhaps the British Pound will continue to depreciate, which could give a significant boost to import prices and inflation. This would then be problematic for a possible rate cut.

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