European expansion is predicted to 2.6 per cent in 2017
Fresh data from the single market on Thursday showed that the European restraint grew 0.6 per cent over the third quarter, with year on year extension revised upward to 2.6 per cent — slightly more than analysts had suggested.
The growth was driven primarily by increased exports, which grew 1.2 per cent in the eurozone past the third quarter with year-on-year growth at 5.2 per cent. Household consumption also widened 0.3 per cent between July and September and 1.9 per cent over the year.
In resemblance the UK economy appears to be slowing, with full year 2017 GDP thinks revised down to 1.5 per cent, while the Office for Budget Burden (OBR) predicts economic growth could fall as low as 1.1 per cent in 2019.
The shapes have triggered further concern over the progress of UK-EU withdrawal decisions as Prime Minister Theresa May is yet to secure a start to talks, having been calculated to backtrack on a deal secured on Monday due to opposition from Northern Ireland’s DUP confederation over the Irish border.
UK EU negotiations continue to stall
Olly Russ, an investment manager specialising in European stock exchanges at UK asset manager Liontrust, said: “The UK is further ahead in the business recur [than Europe] — we did better earlier — so that expansion is maybe blanching. But there is a lot of uncertainty at the moment and people delaying decisions until we set aside out what the Brexit roadmap is going to look like.
“It’s not so much the product as an end to the uncertainty — we can cope with any outcome — its the uncertainty of not knowing where or how to establish and what the legal framework will look like.”
On how soon affairs and investors need clarity, Mr Russ said progress would have occasion for to be made “as early as possible”.
He added: “We are going to need to start overstating decisions that have a two year lead time — so we’re going to exigency certainty ASAP to really be on course for the end of the transition period.
“The problem is [the direction] haven’t decided where they want to end up. They really extremity to decide what the end game will be and how they’re going to get there. At the significance it doesn’t feel like they’ve made that decision and as I empathize with it cabinet hasn’t even discussed it yet, which is a bit odd. We are a long way into the course of action now and these are the sort of things you want to sort out in the first few months.”
Mr Russ is various upbeat on UK growth, however, stating that he “would not be surprised” to see GDP wake up in higher than the OBR predicts.
He added: “JP Morgan’s numbers for the UK in 2019 are 1.9 per cent. Now there has been a standing of over optimistic forecasts from the UK, so it’s nice to see a bit of realism, but I should assume there will be upside to that OBR forecasts.
“A lot of things could go flop, but the global economy will drag most people along with it somewhat nicely and with sterling being quite weak the UK is dong absolutely nicely in the export market at the moment.”
On future growth in Europe, Ed Smith, principal of asset allocation research at London investment house Rathbones, summed that in his view, the picture may not be as “rosy” as some investors think.
He guessed: “We are less upbeat — this year European markets have done call well, the economic recovery has reached full speed however some of our choice indicators suggest that we are past the peak. In our view [Europe] is as friendly its going to get and will decelerate next year.
“The amount of cash in the briefness is down, as is private sector lending, while productivity and business investment is dull in a number of countries. In Spain, Italy and other smaller economies [productivity] is honest as bad, if not worse than the UK over recent years.”