Bank of England Pound sterling to Euro Rate debt UK economy UK GDP Second-charge mortgages service sector GBP
Marketing No Comments

GBP/EUR looks to break 1.2000 handle as the pound strengthens

Yesterday, GBP/EUR continued it’s push towards the 1.2000 handle as the UK gets back on track after Omicron, benefiting from an economic growth rebound and further expectations the Bank of England will hike interest rates throughout the year. GBP/USD has followed a similar path with cable pushing past the 1.3600 mark, ending the day on 1.3630. EUR/USD has been dictated by headlines surrounding the Russia-Ukraine conflict, settling in over the last few days at 1.1370.

To find out more about how we can assist you with your Second Charge Mortgage please click here

Statistics in the UK are showing commuter travel within cities recovering to pre-Omicron levels, boosting expectation that February will show a strong growth rebound which is strengthening the GBP against both the euro and US dollar. The tensions between Russia and the Ukraine have kept EUR/USD trading between 1.1300 and 1.1400 with mixed reports of a de-escalation and a Russian withdrawal, however satellite imagery shows that the Russian Military are still very much active on the border. The pair will likely be driven by the headlines over the coming days and weeks, dependent on whether Russia stick to their withdrawal claims.

This morning, UK Retail sales data was released, with sales month on month beating market expectation by 0.5%. CPI was also released in France; the European Central Bank will keep a close eye on these stats after changing it’s tune earlier on in the year with regards to a potential interest rate hike.

By NIKI SEHMBI

Source: World First

Discover our Second Charge Mortgage Broker services.

UK inflation economy Omicron UK economic recovery UK Economy Bank of England
Marketing No Comments

Inflation hits 30-year high, fuelling expectations of rises in cost of borrowing

UK inflation has climbed to a fresh 30-year high, as the cost-of-living crisis intensifies for households.

Official figures show annual UK consumer prices index inflation rose from 5.4% in December to 5.5% in January.

Annual inflation on the old all-items retail prices index measure surged from 7.5% in December to 7.8% last month, the figures from the Office for National Statistics show.

The rapidly worsening inflation outlook has heightened expectations of further swift rises in UK interest rates from the Bank of England.

Colin Dyer, client director at abrdn Financial Planning, said: “After finishing 2021 on a 30-year high, UK inflation continued to climb in January.

“Households should brace themselves for further acceleration in the cost of living until at least the second half of 2022, particularly when the energy price hike is implemented in April. The Bank of England could also be justified in raising interest rates more than once over the next few months to defend these soaring prices – meaning even more challenges may lie ahead for households.”

To find out more about how we can assist you with your Second Charge Mortgage please click here

Suren Thiru, head of economics at British Chambers of Commerce, said: “Rising inflation highlights both the cost-of-living crisis facing households and the uphill struggle for businesses to keep a lid on price rises amid surging cost pressures.

“While the headline annual figure remains at a 30-year high, the decline in monthly inflation in January offers some hope that we may be nearing the peak in the current spike in inflation. “

He added: ““Inflation should peak at over 7% in April as reversal of the hospitality VAT cut and the energy price cap rise enters the calculation. However, the current Russia-Ukraine tension could keep inflation higher for longer by triggering a further surge in wholesale energy costs.

“Rising inflation could well be a significant drag anchor on UK economic output this year by weakening consumer spending power and damaging firms’ finances and ability to invest.”

The Bank of England has predicted annual UK CPI inflation will peak at 7.25 per cent in April.

A poll published this week revealed a further quarter-point rise in UK base rates next month, to 0.75%, is now forecast by nearly two-thirds of economists.

Twenty-five out of 40 economists polled by Reuters between February 7 and 11 predict the Bank of England’s Monetary Policy Committee will vote for such a rise next month. The next rates decision is due to be announced on March 17.

Meanwhile, 21 out of 41 economists forecast a further rise in benchmark UK interest rates to 1% in the second quarter.

By Ian McConnell

Source: Herald Scotland

Discover our Second Charge Mortgage Broker services.

UK inflation Bank of England
Marketing No Comments

UK inflation has economy in ‘chokehold’ with peak yet to come

As UK inflation hit a 30-year high of 5.5% in January, analysts have warned that it has the economy in a “chokehold”, with the peak yet to come.

According to the latest data from the Office for National Statistics, the 12-month UK Consumer Price Index was at its highest level since records began in January 1997. The last time it was higher than current levels was in March 1992 when it stood at 7.1%, based on historic modelling.

Laith Khalaf, head of investment analysis at AJ Bell, said: “Inflation is building and is now expected to reach a crescendo of over 7% in April, heaping pressure on consumers, businesses and savers.”

Although the Bank of England, which is expected to continue increasing interest rates on the back of better-than-expected UK job data, believes inflation will sink back down to 2% by 2024, Khalaf noted that inflation is, indeed, “unpredictable”.

“It is prudent to acknowledge that it might possibly tail off, though the bank’s forecasting capabilities haven’t exactly won any awards in recent times. The Ukraine crisis further muddies an already blurred picture.”

To find out more about how we can assist you with your Second Charge Mortgage please click here

Rupert Thompson, chief investment officer at Kingswood, said: “Inflation will head higher still over coming months, likely peaking at around 7.5% in April when the increase in the energy price cap feeds through. Today’s data leave a further 0.25% rate hike in March looking all but a done deal.”

Meanwhile, prices continue to rise while wages remain suppressed.

Chris Beauchamp, chief market analyst at IG Group, stated that markets “will be relieved that the pace of inflation increases appears to have moderated, but today’s further price rises mean consumer spending will keep getting squeezed, heightening the risk of tipping the economy into reverse”.

Rachel Winter, associate investment director at Killik & Co, said: “Inflation has the economy in a chokehold, with prices skyrocketing and consumers feeling significant pressure on their household budgets.

“High energy prices and increased shipping costs are key contributors to this inflationary pressure, but there are other causes for concern in the near term.

“Consumers are braced for next month’s rise in rail fares, growing mortgage payments and higher national insurance, and the Office for National Statistics confirmed yesterday that wages are falling in real terms because they are not keeping pace with inflation. All eyes are on Russia and Ukraine, where conflict would be likely to push oil and gas costs even higher.”

Sarah Giarrusso, investment strategist at Tilney Smith & Williamson, noted that the UK economy remains strong, growing by 7.5% in 2021, representing the strongest growth in the post-war period.

But the Omicron variant of Covid-19 has caused disruptions. “The employment data released yesterday (15 February) showed employment fell 38,000 in January. However, the labour market remains tight with vacancies at their highest level since records began in 2001 and an unemployment rate of 4.1%,” said Giarusso.

“Given this strength and high inflation some economists are expecting the Bank of England will have to be more aggressive than currently signalled by MPC members.”

Willem Sels, global CIO of HSBC Private Banking and Wealth, added that global factors such as supply chain bottlenecks leading to price pressures is likely to see UK inflation continue drifting higher.

“This affects everything from food and clothes prices to cars. There are more local UK factors too, in particular the 54% increase to the Ofgem energy price cap, which will feed through into CPI,” he explained.

“Job figures remain positive but are not enough to offset the squeeze on real household incomes. With inflation exceeding wage growth, real household income will probably fall by 2.5% this year.

“The silver lining? We think the Bank of England will hike interest rates less than the market fears, as it knows that the factors behind inflation are also the drivers behind lower real income, which threaten to limit economic growth. We expect the Bank rate to rise to 1.25%, lower than the markets’ expectation of around 1.75%.”

IG’s Beauchamp added: “Another Bank of England rate rise remains all but certain, but at least this slower pace of CPI increase means the more outlandish expectations will be dialled back. ‘Slow and steady’ are the watchwords for tightening on both sides of the Atlantic, it seems.”

Recent economic data has strengthened the case for more fiscal tightening in the coming months, with consensus expecting a third interest rate hike following the Bank of England’s meeting in March.

At Federated Hermes, the base case is for a further 0.25% increase, although a larger 0.5% rise “cannot be ruled out”, according to Silvia Dall’Angelo, senior economist at the international business of the firm.

“In the short term, the Bank might need to provide a stronger signal and bring some tightening forward to prevent second-round effects from elevated realised inflation against the backdrop of a tight labour market,” she said.

“As the year progresses, the trade-offs the bank faces might change, as high cost-push inflation, fiscal and monetary tightening weigh on the consumption outlook.”

By Alex Rolandi

Source: Professional Adviser

Discover our Second Charge Mortgage Broker services.

UK GDP Sterling BoE UK economy UK economic growth Pound Sterling
Marketing No Comments

UK economy sees surge in annual growth

On the back of a milder than anticipated hit during December, the UK economy can celebrate expanding at its fastest rate since the Second World War during 2021.

Recording a 7.5% annual rate of expansion, the figure is the largest since 1941 – also making Britain the fastest growing advanced economy during the year as a whole. However, the cloud to accompany the silver lining was that the UK economy still remained smaller than in the fourth quarter of 2019 – immediately before the pandemic hit.

To find out more about how we can assist you with your Second Charge Mortgage please click here

The UK suffered a deeper pandemic-hit recession than most of its peers, contracting by 9.4% during 2020. However, its recovery has been bolstered by billions in government aid and now the economy is forecast to outperform all other Group of Seven nations again this year.

The news is likely to impact the Bank of England’s focus in recent months – it is expected to step up efforts to curb inflation, with more interest rate rises likely.

Still, GDP dropped 0.2% in December with the Omicron variant keeping many consumers at home – however, this was below the 0.5% that had been forecasted. January is likely to be weak with Omicron restrictions extending into the New Year.

Speaking to Bloomberg, Yael Selfin, chief economist at KPMG UK, noted the squeeze on household incomes from rising prices and tax rises would also impact economic activity in the coming months.

By Paul Lucas

Source: Mortgage Introducer

Discover our Second Charge Mortgage Broker services.

UK economy
Marketing No Comments

UK economy grew 7.5% in 2021, mostly recovering from its pandemic plunge

The UK economy grew 7.5% in 2021, official figures revealed Friday, rebounding from its historic 9.4% plunge in 2020 when pandemic restrictions stifled activity.

On a quarterly basis, U.K. GDP (gross domestic product) is estimated to have increased by 1% in the final three months of the year. It follows a downwardly revised 1% increase the previous quarter, the Office for National Statistics (ONS) said on Friday.

In December, GDP contracted by 0.2% as the omicron Covid-19 variant forced renewed caution and containment measures, though economists polled by Reuters had expected a more severe 0.6% contraction.

The largest contributors to the quarterly rise in output were from “human health and social work activities driven by increased GP visits at the start of the quarter,” according to the ONS, along with a “large increase in coronavirus (Covid-19) testing and tracing activities and the extension of the vaccination programme.”

To find out more about how we can assist you with your Second Charge Mortgage please click here

The ONS said economic output in the fourth quarter remained 0.4% below its pre-pandemic level (in the fourth quarter of 2019).

“The UK’s self-imposed lockdown to ‘protect Christmas’ has turned out to have only a mild impact on growth in December. This is an encouraging sign for the health of the economy,” said Emma Mogford, fund manager of the Premier Miton Monthly Income Fund.

Though the omicron variant did not present the significant setback initially feared in November, the UK economy faces a raft of challenges in 2022.

The Bank of England now expects inflation to peak at 7.2% in April and has imposed back-to-back interest rate hikes for the first time since 2004, taking the main Bank Rate from 0.1% to 0.5%, with more tightening expected.

Meanwhile, the country’s energy regulator has increased its price cap by £693 ($938) per year from April 1 because of soaring energy prices, placing further strain on millions of households.

The Bank of England also slashed its GDP growth forecasts last week, cautioning that the impact of inflation means the economy is likely to grow 3.75% in 2022 instead of the 5% it previously projected.

“The cost of living has become a big concern for millions of people and if it continues for a sustained period of time, it will be harmful to the wider economy,” said Annabelle Williams, personal finance specialist at British online investment management firm Nutmeg.

By Elliot Smith

Source: CNBC

Discover our Second Charge Mortgage Broker services.

Bank of England Pound sterling to Euro Rate debt UK economy UK GDP Second-charge mortgages service sector GBP
Marketing No Comments

Sterling flat against euro ahead of BoE speaker

Sterling was flat against the euro not far from a 1-1/2 month low on Wednesday, while investors await a speech by a senior Bank of England official later in the day.

The pound fell sharply against the single currency last week after the ECB’s unexpected hawkish shift boosted euro zone yields, overshadowing the Bank of England’s move of raising rates by 25 basis points.

Bank of England Chief Economist Huw Pill, who will give a speech at the annual conference of Britain’s Society of Professional Economists, “was one of the majority five Monetary Policy Committee (MPC) members voting for just a 25bp hike last week”, ING analysts said.

“We think the BoE will welcome the role the strong pound sterling is playing in deflecting some of the energy price surges – and see no reason for the BoE to start railing against aggressive pricing of the BoE trajectory,” they added.

The pound was flat against the euro at 84.22 pence within striking distance of its post-ECB low at 84.74 pence.

To find out more about how we can assist you with your Second Charge Mortgage please click here

Money markets are still pricing in a 25 bps rate increase in March and 125 bps by December 2022, but some analysts have warned about the risks of excessive expectations.

They noted that Bank of England Governor Andrew Bailey said last week not to take for granted the BoE was embarking on a long series of rate hikes, while the BoE’s downward revision to inflation forecasts assumed interest rates at 1.5% by mid-2023.

The pound rose 0.2% versus a slightly weakening dollar to $1.3576.

The dollar stayed in a holding pattern a day before the release of U.S. consumer price data that may offer new clues on the pace of Federal Reserve policy tightening.

Discover our Second Charge Mortgage Broker services.

Investors will also be monitoring political developments as Prime Minister Boris Johnson fights for his political survival.

On Tuesday, he reshuffled some ministers in his administration to appease his lawmakers, angered by a series of scandals.

“Even without a major change in the policy direction, the replacement of the UK prime minister with a less erratic and gaffe-prone alternative would a be positive for UK risk markets and sterling,” said Kallum Pickering, senior economist, director at Berenberg.

“While the risks may be tilting towards a scenario where Johnson somehow manages to cling on as prime minister, it remains more likely than not that the Conservatives will try to replace him soon, in our view,” he added.

Reporting by Stefano Rebaudo

Source: UK Reuters

UK rates Bank of England UK Economy BoE governor UK inflation Interest rates BoE
Marketing No Comments

Bank of England poised to act under new inflation strain

Facing pressure to curb surging inflation, the Bank of England looks set to raise interest rates again on Thursday and signal further unwinding of its pandemic stimulus, including a gradual reversal of its huge bond-buying plan.

Twenty-nine of 45 economists polled by Reuters late last month said the BoE would raise Bank Rate to 0.5% from 0.25% at its February meeting, hot on the heels of December’s rate hike, the first by a major central bank since the pandemic.

It would mark the first back-to-back borrowing cost increases by the BoE since 2004, reflecting an urgent need to show it is on top of an inflationary surge.

Separately, British finance minister Rishi Sunak was expected to announce on Thursday measures to smooth a possible 50% jump in household energy bills. read more

The Bank of England forecast in December that inflation would peak at around 6% in April but price growth that month jumped by more than expected to 5.4%, its highest in almost 30 years.

The labour market has also tightened, something Governor Andrew Bailey says is key to the monetary policy outlook.

To find out more about how we can assist you with your Second Charge Mortgage please click here

Data published on Thursday showed employers were offering higher pay deals in the face of staff shortages and rising inflation. read more

“Members are likely to disregard what looks set to be a temporary bump in the path of the economic recovery around the turn of the year due to the spread of the Omicron variant,” said Investec chief economist Philip Shaw, predicting an unanimous 9-0 vote by the Monetary Policy Committee to raise rates.

The BoE’s stance contrasts with the European Central Bank, which looks set to leave policy on hold on Thursday. read more

The U.S. Federal Reserve is signalling a first rate hike in March although officials spoke cautiously on Monday about what might follow. read more

Investors will be looking for signs in the Bank of England’s new inflation forecasts whether it thinks investors are being too aggressive by betting on the Bank Rate reaching 1.5% by the end of 2022.

But Bailey may be wary about sending explicit messages after the BoE wrong-footed many investors last year.

Among MPC members, only Catherine Mann, Bailey and Deputy Governor Jon Cunliffe have spoken publicly in 2022.

“After the BoE’s communications fiasco late last year, it has decided to respond by saying less rather than more,” said JPMorgan economist Allan Monks, cautioning that investors’ conviction about a 25 basis point hike might be overdone.

The announcement is due at 1200 GMT. Bailey will lead a news conference half an hour later.

Discover our Second Charge Mortgage Broker services.

LITTLE QT

If rates do go up to 0.5%, it marks the point at which the BoE has said it will begin a process called quantitative tightening (QT) – or reducing its vast holdings of government bonds, bought to stimulate Britain’s economy.

The Bank of England has said it will start by not reinvesting money from maturing gilts, possibly as soon as March when 25 billion pounds of bonds it owns are due to mature.

Bond investors want to know if the BoE intends to accelerate the QT process.

Last August, it said it would start to sell its gilts once Bank Rate hits at least 1%, depending on economic circumstances.

“Even though the market is actively pricing such a scenario, we continue to doubt that the hiking cycle will get that far,” said Rabobank strategist Stefan Koopman, who warned the BoE might find itself raising rates just as the economy slows.

Tax hikes on workers, as well as rising energy and food bills, are set to intensify a cost-of-living squeeze.

A survey from insurance and pensions company Aegon showed 38% of Britons were worried that rising interest rates would hit their finances. An Ipsos MORI poll for the Evening Standard newspaper showed economic morale at a one-year low.

By Andy Bruce

Source: UK Reuters

UK economy
Marketing No Comments

UK economy gets moving again as diners and commuters return

The UK economy saw increased activity in the final week of January as the effects of the Omicron wave of Covid retreated and consumers saw the removal of Covid restrictions.

Near-term data from the ONS revealed the lifting of Plan B restrictions in England on January 27 helped the seven-day average estimate of UK seated diners increase by 9 percentage points in the week to 31 January 2022.

This was 106% of the level in the equivalent week of 2020.

In London and Manchester seated diners increased by 8 and 11 percentage points over the same period, respectively said the ONS.

The news indicates the all-important UK services sector – which accounts for over 80% of UK economic activity – is set for a recovery in February.

To find out more about how we can assist you with your Second Charge Mortgage please click here

The ONS says retail footfall in the UK increased by 2% from last week but was still at only 82% of the level seen in the equivalent week of 2019.

Nevertheless the ONS data shows this is the third consecutive week of increasing retail footfall and was again driven in part by weekly rises in high street footfall.

Consumers are spending again too; the aggregate CHAPS-based indicator of credit and debit card purchases – supplied to the ONS by the Bank of England – increased by 3 percentage points from the previous week, to 90% of its February 2020 average.

There were increases in all spending categories in the latest week, the largest of which were in “delayable” and “social” spending, both of which increased by 4 percentage points.

But, 69% of respondents to a regular ONS survey reported their cost of living had increased over the last month which was up slightly from the last period (66%).

Rising inflation and imminent tax and energy bill increases are all tipped by economists to place pressure on consumers in 2022, potentially denting the post-Covid economic recovery.

However the labour market remains in strong shape with the ONS saying the total volume of online job adverts on 28 January 2022 was at 141% of its February 2020 average level making for the third consecutive week-on-week increase.

This suggests a recovery following the dip in the volume of online job adverts over Christmas and New Year.

In all, the findings are consistent with an economy that is likely to recover in the first half of 2022, but the recovery will in all likelihood be stifled by rising costs.

Written by Gary Howes

Source: PSL

Discover our Second Charge Mortgage Broker services.

Bank of England Pound sterling to Euro Rate debt UK economy UK GDP Second-charge mortgages service sector GBP
Marketing No Comments

Bank of England to Defend Pound Sterling’s Gains against Euro, Dollar says Analyst

In its quest to fight inflation the Bank of England will welcome onside the recent appreciation in the value of the British Pound.

The Bank of England will on Thursday likely raise interest rates again according to current market expectations in an attempt to stem surging inflation levels which could go as high as 7.0% this year and risk staying above the Bank’s 2.0% target for months to come.

For the Pound the steady build up in expectations for 2022 rate hikes at the Bank has proven a potent source of support: for the UK currency’s valuations to be maintained going forward these expectations must not be disappointed.

Expectations are certainly lofty with Chris Turner, Global Head of Markets and Regional Head of Research for UK & CEE, saying current pricing by money markets “is now at a staggering 1.35% for the December 2022 Bank of England meeting”.

This implies over 100 basis points of hikes are expected to be delivered in 2022, posing questions as to whether the market is getting ahead of itself.

To find out more about how we can assist you with your Second Charge Mortgage please click here

Given the Pound is priced according to these expectations, any paring back of such expectations could result in the Pound retreating from recent highs against the Euro while opening the door to a more concerted downtrend against the Dollar.

But Turner says the Bank won’t want to derail Pound Sterling as a stronger currency in fact helps ease inflationary pressures.

“In the past, in a deflationary environment with weak global demand a former BoE might have issued a verbal rate protest against such pricing – in order to weaken GBP. However, we suspect that the Bank of England is currently welcoming GBP strength in its fight against higher energy prices,” says Turner.

This year has seen the effective exchange rate of the Pound rise to its highest levels since 2016 when it fell in precipitous fashion following the UK’s vote to leave the EU.

The effective exchange rate is a basket of Pound exchange rates that weighs in favour of the country’s main trade partners.

Give the Eurozone is by far the UK’s largest trading partner it stands that the Pound to Euro exchange rate is the effective exchange rate’s largest constituent, and its recent rally to two-year highs has aided the UK’s purchasing power.

A stronger Pound makes the cost of imports cheaper, which is important given the UK is a net importer, thereby acting as a deflationary source.

Turner says a 25 basis point rate hike on Thursday and no protest against market pricing of rate hikes should see EUR/GBP pressing strong support near 0.8275. For those watching the GBP/EUR equation translates into a rise to 1.2084.

ING holds a base case expectation for the Bank to hike rates 25 basis points on a 8-1 vote, raise their inflation forecasts and say medium-term growth has not been impacted by Omicron.

They are expected to signal more “modest” rate hikes are coming but are vague about when they might come.

They are also expected to announce quantitive tightening will begin by not reinvesting maturing bonds purchased under their quantitative easing programme.

A more hawkish scenario – but which does not form ING’s base-case – is the Bank hikes on an unanimous decision and explicitly signals another rate hike in March or May. They also signal a desire to accelerate quantitative tightening via bond sales in coming months.

Here, EUR/GBP goes to 0.8250 (GBP/EUR up to 1.2121).

ING says a dovish outcome would see the Bank of England forgoing a rate hike courtesy of a split decision on the MPC, while signalling that a rate hike is likely at the March meeting.

They would justify going against the market’s expectations for a hike by saying they need more time to gather data regarding the impact of Omicron on the economy.

Here EUR/GBP is forecast to go to 0.8450 (GBP/EUR to 1.1834).

Written by Gary Howes

Source: Pound Sterling Live

Discover our Second Charge Mortgage Broker services.

Bank of England
Marketing No Comments

Cost of Covid-19 and Brexit to the UK economy now at at least £250bn each, with Brexit expected to cost more long-term: research

What do Brexit and Covid-19 have in common? They’ve each cost the UK at least £250bn so far, new research out this week suggests – adding that long-term, Brexit is set to prove the more expensive.

Parcel delivery comparison website ParcelHero this week analysed Government figures and publicly-available third-party economic assessments and forecasts to arrive at the totals.

ParcelHero head of consumer research David Jinks says: “British businesses have had a torrid few years. The impact of either Covid-19 or Brexit would have been bad enough; together they have proved disastrous. But which has been the heavier burden for them to bear? The shocking answer is that the entirely avoidable Brexit crisis has had as much of an impact on UK businesses as the unforeseeable Covid-19 tragedy, and its costs are still rising.”

ParcelHero’s calculations start with the cost of Covid-19, citing research from the Centre for Economics and Business Research which put the total for Covid-19 lockdowns at £251bn. It found that the value of goods and services produced by the economy was more than £250bn lower than it would have been, as represented by the GVA (gross value added) of the economy – the value of goods and services delivered minus the costs of producing them.

To find out more about how we can assist you with your Second Charge Mortgage please click here

Within that, business insurer Simply Business found that Covid-19 cost small businesses £126.6bn, and in November 2021, a Government report suggested that the UK government had set aside almost £365bn in announced budgetary measures in its response to Covid .

The Brexit column of the calculation starts with a 2020 Bloomberg Economics report that suggests the economic cost of Brexit would have top £200bn in lost revenues to UK companies, before it even happened, with the British economy by then 3% smaller than it otherwise would have been.

In August 2020, an Institute for Government suggested in August 2020 that the UK government expected to have spent £8.1bn on preparing for Brexit by the end of the transition period, which ended in January 2020. That included £4.4bn that the National Audit Office suggested had already been spent by January 31 2020.

And in November 2021, a report from the UK Trade Policy Observatory suggested that falling trade had cost UK businesses a further £43.5bn – divided between £32.5bn in imports and £11bn in exports.

Jinks says the two sums mean “the combined costs of Brexit and of the pandemic both equal around £250bn. However, in the long term, Brexit could end up costing even more than Covid-19.”

He points to comments by Thomas Sampson, associate professor at the London School of Economics, who predicted in an August 2020 blogpost that, “When measured in terms of their impact on the present value of UK GDP, the Brexit shock is forecast to be two to three times greater than the impact of COVID-19.”

And he cites forecasts from the Office for Budget Responsibility (OBR) last October that suggested leaving the EU would “reduce our long run GDP by around 4%.” That adds to a 2% hit from the pandemic.

The Government Business Insights report of January 13 2022 estimated that 66% of UK businesses experienced challenges with exporting and 79% with importing in December 2021, with 33.7% of transport and logistics companies closing, permanently (2.7%), temporarily (11.8%) or partially (19.3%).

By Chloe Rigby

Source: Internet Retailing

Discover our Second Charge Mortgage Broker services.