Download
HTML Embed
HTML EMBED
Click to Copy

Latest Episodes

Download
HTML Embed
HTML EMBED
Click to Copy
Marketplace Morning Report
Download
HTML Embed
HTML EMBED
Click to Copy
Download
HTML Embed
HTML EMBED
Click to Copy
Marketplace Morning Report
Download
HTML Embed
HTML EMBED
Click to Copy
Download
HTML Embed
HTML EMBED
Click to Copy
Download
HTML Embed
HTML EMBED
Click to Copy
Marketplace Morning Report
Download
HTML Embed
HTML EMBED
Click to Copy
Marketplace Morning Report
Download
HTML Embed
HTML EMBED
Click to Copy
Marketplace Morning Report
Download
HTML Embed
HTML EMBED
Click to Copy
Download
HTML Embed
HTML EMBED
Click to Copy

Brexit looms over U.K. economy as Theresa May steps aside

Stephen Beard Jun 6, 2019
Share Now on:
HTML EMBED:
COPY
Britain's Prime Minister Theresa May arrives for a European Union (EU) summit at EU Headquarters in Brussels on May 28, 2019.
Emmanuel Dunand/AFP/Getty Images

Friday, June 7 marks the formal end of British Prime Minister Theresa May’s term in office. She steps into a caretaker role while her party spends the next month or so choosing a new leader who will take over the top job in British politics –– and have to deal with the country’s most intractable problem: Brexit.

When May’s tenure began almost three years ago she declared confidently,: “Brexit means Brexit and we’re going to make a success of it.”

But she didn’t, and that led to her announcing her resignation two weeks ago. May’s failure to deliver Britain’s departure from the European Union has not only brought her premiership to an untimely end, it has also left a cloud over the British economy.

Arno Hantzsche, a senior economist with the National Institute of Economic and Social Research.

“On the plus side, Britain has a very low rate of unemployment and the country’s public finances look pretty stable. But there are some worrying underlying problems,” Arno Hantzsche, senior economist with the National Institute for Economic and Social Research, told Marketplace.

“Investment growth in recent years has been very weak, and that doesn’t bode well for the future.”

Investment in productive assets like plants and machinery has hardly grown at all over the past three years; last year, it actually fell. Hantzsche says he has no doubt that the cause of that was uncertainty over Brexit and the future trading relationship between Britain and its largest trading partner, the European Union.

Paradoxically, that uncertainty may explain Britain’s booming labor market. Paul Dales of Capital Economics, a consulting firm, says businesses feel it’s safer to hire extra staff than tie up more capital in plants and equipment.

Paul Dales of Capital Economics.

“The uncertainty over Brexit has meant businesses have not invested, so they’ve hired instead. So we’re actually in a situation where the unemployment is at a 44-year low of 3.8%,” Dales said.  

When rising employment is not accompanied by rising investment, the same amount of output is spread around more workers, so productivity growth –– the ultimate indicator of increasing prosperity –– stalls.

Vicky Pryce, economic advisor to the Centre for Economics and Business Research.

“That is precisely what has happened in Britain,” said Vicky Pryce, economic adviser to the Centre for Economics and Business Research and a former adviser to the British government.

“Our productivity growth has been considerably lower than all the other countries that we compare ourselves with, the G7, for example, except possibly Italy, which is appalling,” she said.

Brexit uncertainty, with all its attendant problems, is now the biggest headwind facing the British economy. When May finally leaves office, says Dales of Capital Economics, she will be largely unlamented.

“She will go down in history as the prime minister who failed to deliver Brexit. But it remains to be seen whether the next prime minister, whoever that is, can do a better job of it,” he said.

If you’re a member of your local public radio station, we thank you — because your support helps those stations keep programs like Marketplace on the air.  But for Marketplace to continue to grow, we need additional investment from those who care most about what we do: superfans like you.

Your donation — as little as $5 — helps us create more content that matters to you and your community, and to reach more people where they are – whether that’s radio, podcasts or online.

When you contribute directly to Marketplace, you become a partner in that mission: someone who understands that when we all get smarter, everybody wins.