As Theresa May, Prime Minister of the United Kingdom sets out to schedule her exit, nearly after three years, it may be a good time to review her economic legacy that, interestingly, does not seem to be distinguishable from her predecessor, David Cameron.
At one hand, the much talked about Brexit recession did not happen, more jobs were created and wages grew; but on the other hand, austerity continued, homes remained largely unaffordable and productivity growth remained appalling.
One of the direct and crucial impacts of the referendum has been that the UK economy today is 2% smaller than the pre-referendum forecast. This means a great deal of lost economic output. Another closely related shock has been related to the increase in import prices and decreased value of Great Britain Pound (GBP). Overall, economic growth in the UK has been 4.8% since 2016, which is lower than both Eurozone (5.5%) and the United States (7.3%). The future forecast is also similar as the country remains confused in the vicious circle of Brexit.
According to a team of experts at Bloomberg, uncertainty related to the impending exit from the EU has contributed towards a slower economy.
Workers’ productivity grew merely by 0.5% last year, which could present a significant problem in the long-run since the country is going to be deprived of a certain portion of productive and skilled labor in the post-Brexit scenario. Amid financial difficulties, both Cameron and Theresa May pressed for different welfare changes, some of which included welfare cuts as well. These changes are going to make matters worse for many middle and lower income class families in the UK.
House affordability is another measure of the economy and there has been a negligible improvement under May’s leadership of the country. Buying a house still seems to be out of reach for most young-earners and first-time buyers in most cities of the UK.
In spite of all these factors, there has been some good economic news as well. The UK has enjoyed an unprecedented level of a job boom in the last three years, as employment rates have been highest for nearly 150 years. Since Theresa May entered Downing Street, as much as 1 million more people have found work and unemployment rates have been lowest since the 1970s. However, some analysts see it as a short-term phenomenon as firms may feel safer to invest in labor than in capital in the time of uncertainty. as
As Theresa May prepares for her exit within the next few months, she still has to take certain crucial economic decisions, which will decide the actual fate of her economic legacy.