The pound’s sharp fall since the Brexit vote and a mood of uncertainty among employers has hit household budgets, creating a tough economic backdrop for Theresa May’s snap election, a Guardian analysis shows.
The prime minister will be hoping the resilience seen in the UK economy will hold over the coming months now that she has called an election for this June. But the Guardian’s monthly tracker of economic news shows living standards are already falling as rising prices outpace meagre pay growth.
That bodes ill for an economy reliant on household spending and the latest indicators from Britain’s retail and leisure industries suggest they are feeling the effects of a tightening consumer squeeze. The export sector has failed to offset that domestic drag and GDP figures due this week are expected to show the economy slowed markedly at the start of this year.
Still, lending support to those who say May was right to call a vote sooner rather than later, unemployment remains low, the housing market is steady, stock markets are near record highs and business activity continues to rise – albeit at a slower pace.
Writing in the Guardian, Andrew Sentance, a former member of the Bank of England’s monetary policy committee, said support for the UK from a strong global economy was being offset by domestic pressures.
“There are two big themes which stand out from this month’s data, and they show the UK being pulled in opposite directions by the global economy and consumer spending,” said Sentance, a senior economic adviser at the consultancy PwC.
“We should expect the consumer slowdown to dominate the growth picture over the course of this year … GDP growth figures for the first quarter released at the end of this week are likely to confirm that the UK economy is already slowing.”