Brexit uncertainty starting to take its toll

Recent data have brought more concrete signs that uncertainty ahead of the EU referendum on 23rd June is starting to weigh on the economy. GDP in Q1 grew by a modest 0.4% on the quarter and the Markit/CIPS surveys point to a further slowdown in Q2. Meanwhile, unemployment rose in the latest data. However, not all of the slowdown can be attributed toBrexit fears. The jitter in financial markets and global growth worries at the start of the year (which have since abated) were to blame too, while the labour market data can be volatile. Of course, referendum uncertainty may weigh more heavily on the economy as the vote gets even closer. But if the UK votes to stay, as bookmakers’ odds suggest, then the economy should bounce back in the second half of the year.