UK economy: inflation eases but Brexit gloom gathers

Credit: Reuters Studio
Published on June 19, 2019 - Duration: 01:37s

UK economy: inflation eases but Brexit gloom gathers

Britain's inflation rate cooled in May but a survey shows factory orders slid in June against a backdrop of stoppages in car production.

David Pollard reports.


UK economy: inflation eases but Brexit gloom gathers

Sterling rose for a second day on Wednesday but sentiment over the UK economy did not.

New data from the Confederation of British Industry shows UK factory orders skidded this month as car production put on the brakes.

From -10 in May, its total order book balance sank to -15, it says.

That's the weakest since October 2016 and a steeper fall than expected.

Its production index sank to +2 from +14 in May, which the CBI says reflects the sharpest contraction in car manufacturing since March 2009.

"There's clear evidence," it added, "that Brexit uncertainty is really biting." That also a theme on UK share markets on Wednesday.

Whitbread, over-50s travel and insurance operator Saga and luxury handbag maker Mulberry all reporting slower business.

All mention the uncertain outlook as a challenge to performance.

As for the pound: it's been given a lift by a new dovish tone at the ECB and the Fed.

And with UK inflation falling to a target two per cent in May, according to the latest reading.

Hopes may lift that - despite recent hawkish signals - the Bank of England may soften its line too.

From its recent five month lows against the dollar, sterling is still down by 5% since early May.

As concerns grow that arch-Brexiteer Boris Johnson, tipped to win the current race to become the next prime minister, will take the UK out of the EU with or without a deal by the end of October.

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