Dun & Bradstreet’s Q3 analysis of the UK industry represents a cloudy outlook for the economy, as the country continues to comes to terms with the implications of Brexit. Worldwide fluctuations, such as Donald Trump winning the US election, also continue to weigh down on the economy and businesses must err on the side of caution as 2017 approaches.
Dun & Bradstreet recently downgraded the UK’s risk rating from DB2c to DB2d, marking the economy as ‘deteriorating’. Repercussions of the downgrade put the UK as the second-worst G7 economy, ahead of only Italy. The Q3 UK industry report continues the relatively pessimistic outlook going into 2017 with Dun & Bradstreet analysis finding that the economy is set to grow 0.7%, down from the pre-referendum forecast of 2.0%.
Critics of leaving the European Union say the full impact of Brexit hasn’t been felt yet because Article 50 hasn’t been invoked. In Q3 the UK economy posted a resilient 0.5% domestic output, beating the consensus’ predictions of 0.3%. However, the depreciating pound is likely to lead to a rise in inflation and cause further fluctuations in markets around the world. A stable economic recovery is now uncertain and remains unforeseeable in the near future.
The similarities in Trump’s ascension to power and Brexit are clear in that global change is to be expected. The imminent series of political uncertainties will continue to throw up new barriers to overcome too – France, Germany and Holland all face elections over the next 12 months and the potential of an uprising of individualism.
The report can also provide comparative data on Q2 to Q3 and an insight into the following:
- Payment Snapshot – data on the proportion of business payments made on time
- Business Failures – data on corporate insolvency
- Risk of Failure – the % of businesses facing an increased likelihood of risk
Below is an expert comment from Senior Economist Daniele Fraietta on the UK economy. If you would like to speak to the Dun & Bradstreet economist team please do let me know. Also, the entire report can be accessed and downloaded on Dun & Bradstreet’s website.
“Dun & Bradstreet’s Q3 UK Industry report continues the trend of uncertainty that businesses in the UK face post-Brexit. The UK’s Q2 economic output figures signified the slow downwards shift that the economy is undergoing. The depreciation of the pound and coinciding rise of inflation shouldn’t go unnoticed too; overall we expect inflation to reach 2.6% in 2017. Crucially, all businesses must continue to operate cautiously and call on data to help them find the appropriate areas of growth.”
“Expectations of a quick fix are unrealistic, and the expected political uncertainties in 2017 are already weighing heavily on fragile worldwide economies. Our expectation is that the UK economy and global markets will not fully recover until the UK negotiates its exit from the EU. Our statistical information also indicates that on average 3% of UK businesses currently fall under a high risk of failure. With a heightened chance of failure, it’s paramount for businesses to ensure the correct risk management solutions are in place. Meanwhile a ‘wait-and-see’ approach should be adopted as the UK’s economy continues to change quarter by quarter.”
Daniele Fraietta, Senior Economist, Dun & Bradstreet