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Our views 13 December 2019

Uncertainty is everything in the UK

By Melanie Baker, Senior Economist

5 min read

The decisive general election result may have reduced the uncertainty about the Brexit process somewhat, but it has certainly not disappeared.

Combined with further stimulus, UK activity growth should increase slightly as we progress through 2020. However, we are still pencilling in a rate cut until we receive more information on how business sentiment will respond to the new Brexit realities, and about how much fiscal stimulus we will get.

A weak starting point

The first thing to note is the poor state of the economy going into the election. The labour market has been fraying at the edges and economic growth has been slipping. That is exemplified in the chart below, whether you look at actual output growth or business surveys (in this case, the UK composite PMI).

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