4 graphs that suggest another recession is on its way
A month after the Brexit vote and we’re still unclear about the future of the UK and what it will really be like once we leave the EU. But we do know the IMF has slashed its forecast for UK growth next year and they are warning that the decision to leave the EU has damaged the British economy’s short-term prospects.
In April, it was predicted that the UK economy would grow by 2.2% in 2017. Since the referendum that estimate has dropped to 1.3%. David Blanchflower, economist and former member of the Monetary Policy Committee, believes that we are heading towards yet another recession and has pointed out some key data to back up his views.
Source: GfK
GfK’s key consumer confidence index was falling fast back in 2008, but this graph shows the same could be happening again. Once consumer confidence starts dropping, the less we shop and the economy shrinks, caught up in its own vicious circle of falling confidence and reduced spending.
Source: RICS
The Royal Institute of Chartered Surveyors (RICS) found that agents have seen the number of people walking through their door has dropped sharply in the past few months. The net balance is the lowest it has been since the UK was in the last recession back in 2008.
Source: Bank of England
The Bank of England also found businesses are scaling back their investment plans. The last time that the service sector and manufacturing industry went below zero on their net balance was, you guessed it, during the last recession back in 2008 and 2009. We’re not there yet, but we’re getting close…
Source: Deloitte
Deloitte’s quarterly survey of finance directors showed a net balance of -70% after they were asked whether they were more or less optimistic about the financial prospects for their own companies. This is lower than at any point during the last recession.
More than one in five of the finance directors said that they were significantly less optimistic about the future.
Mr Blanchflower is convinced another recession is on its way – the graphs will need to change direction soon and sharply to prove him wrong.
