First signs of UK economy losing momentum post-Brexit vote, says credit rating agency S&P

‘This supports our view that the UK economy is set to slow gradually over this year,’ said S&P senior economist Boris Glass

Click to follow

First signs that the UK economy is slowing as a result of Brexit are starting to trickle through, according to Standard & Poor’s.

In a report on Wednesday, the rating agency said that while UK financial conditions are still broadly favourable to growth, recent figures indicate a softening demand for funding, both from businesses and from households.

“While corporate financing costs have continued to edge even lower, thanks to an ultra-accommodative monetary policy, demand appears to have started to slip somewhat following the Brexit referendum,” S&P writes in the report. 

The analysts write that, going forwards, the favourable conditions of lending “will not be able to completely offset the expected adverse impact of pronounced Brexit-related uncertainty and the inflation squeeze on household budgets in particular”.

Despite the generally better-than-expected short-term performance of the economy since last June’s referendum, most economists still believe that Brexit will end up being damaging for the UK economy.

The Bank of England has forecast growth of about 2 per cent in 2017, but it expects this to fall to 1.6 per cent in 2018.

Leading analysts from three City of London financial institutions said in January that they expect the cost of Prime Minister Theresa May’s hard Brexit to add up to between 5 per cent and 10 per cent of GDP by 2030.

Separately, research from the Bank of England in February suggested that a fifth of firms are under-investing because they do not feel that they can get the bank credit they need to expand.