The European Central Bank’s Mario Draghi stated yesterday how the shockwaves caused by the Brexit were “contained.” Apparently, he is the only one who is feeling that way, as new data from IHS Markit paints an entirely different picture. In fact, their research goes as far as calling the plunge a “dramatic deterioration in the economy.”
UK Economy Has Slumped Beyond What Most People Anticipated
Depending on whom you pose the question to, the UK economy is either in good shape or completely ruined. The report published by IHS Markit shows that the latter option is the most realistic outcome, as they feel there has been a dramatic deterioration in the economy. That is quite a sharp remark, but there seems to be substantial evidence to back up these claims.
IHS Markit uses a flash purchasing managers index, tracking the whole economy in the country. This particular index shows how the UK economy is at its lowest point in more than seven years. These findings are in-line with the way the Pound Sterling has evolved over the past few weeks, as it is now called the worst performing currency in the entire world.
It was to be expected the Brexit would shake up the UK economy, although the ramifications are a lot more severe than most people had anticipated. Inventories and prices are slumping as well, as they are on the verge of resulting in a contraction in the crucial services sector. If that were to happen, things would look very bleak in the United Kingdom.
A slump in the UK economy goes well beyond what most people see in stock markets and the Pound Sterling value at any given time. The real effects are felt locally, as the factories are feeling the brunt of the effect. The manufacturing index has fallen to its lowest point in over three years, and there is no direct improvement in sight.
Interestingly enough, the release of this report has sent the Pound Sterling plunging even further. Although there was a 0.3% increase on the day the report was released to the public, the value dipped 0.4% afterward. Not a positive sign, but then again, it is in the line of expectations projected by the IHS Markit findings.
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