The British economy has slowed down sharply in the first quarter of 2017 as a result of increased inflation.
June’s Brexit vote led to a decrease in the value of the pound which in turn led to higher inflation. Consumers have reacted to higher prices by buying less, which explains why the economy has lost so much steam in the first three months of 2017.
Economic growth in Jan-March was registered at 0.3%, down from the 0.7% in the previous quarter, a slowdown of 0.4%.
The negative figures could be the first sign of the economic impacts of Brexit, after the economic was seen to be resilient immediately after the vote. If this quarter’s performance is repeated through the rest of the year, annual GDP growth will be 1.2%, significantly lower than the 2% growth forecasted by the Bank of England.
The Liberal Democrats responded by saying these figures show the beginning of a “Brexit squeeze”.
“This suggests the Brexit squeeze is beginning to bite, as prices rise and consumer spending plummets.
“The falling pound, lower wages and higher prices show how Theresa May’s divisive hard Brexit is leaving people worse off,” said Susan Kramer, Liberal Democrat Shadow Chancellor.
The U.S. economy has also been off to a slow start in 2017 with similarly disappointing figures. The U.S. Commerce Department reported 0.7% economic growth in the first quarter, lower than the forecasted 0.9%.