Financial News

Eurozone Growth Hits 10-Year Peak As UK Struggles With Brexit

While Britain and the EU bicker over the divorce settlement and future relationship, a look at their economies after the Brexit vote show the couple are already on different economic paths.

British Brexit minister David Davies has admitted that both sides have ‘significant differences’ over how much the UK should pay to fund ongoing commitments when leaving the EU.

But a look at the Eurozone economy shows Britain is very much the poorer neighbour on current performance.

Financial information firm IHS Markit monitors economic data and has compared notes between the two.

Although the EU’s output has faltered a little in recent months, the single currency bloc is moving towards growth of 2.1% for the year – the highest level since the financial crisis struck in 2007.

Powerhouse economies

Meanwhile, across The Channel, Britain’s growth in the second quarter was just 0.3% and in line with forecasts.

The company looked at a range of performance data to compare the two economies.

Markit’s chief business economist, Chris Williamson, said: “Moderate growth slowdown in the Eurozone from the second quarter is no cause for alarm given that business orders remain strong.

“There’s good reason to be optimistic that the current spurt growth has further to run.”

Many experts feared Brexit uncertainty would spill into the Eurozone and infect the economies of powerhouses France and Germany.

But this has failed to happen.

Uncertainty grips UK companies

Instead, the uncertainty remains contained within the UK and is proving to be a brake on growth as companies remain cautious over investment.

Order books may be full and factories working to capacity, but this is more a result of the weakness of the Pound in foreign markets than an improving economic environment at home.

“The overall level of optimism also remained subdued, mainly linked to Brexit uncertainty, close to levels that have previously been indicative of the economy stalling or even contracting,” said Williamson.

While Brexit has not triggered the catastrophe many politicians warned about, it’s clear that the UK will be standing still for some time to come while the Eurozone marches on.

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