Referendum uncertainty putting the brakes on growth

Recent data have confirmed that the recovery slowed at the start of 2016 and that growth remained precariously unbalanced. Meanwhile, the Markit/CIPS surveys have brought further evidence that intensifying referendum uncertainty has been weighing on activity, pointing to GDP growth of just 0.2% or so in Q2, down from Q1’s already below-trend 0.4% rate. That said, other surveys – such as the CBI’s Growth Indicator – are more upbeat and this, along with a bounce-back in retail sales in April and resilient survey measures of investment intentions, suggests that GDP shouldn’t slow too abruptly in Q2. What’s more, if the UK votes to remain in the EU, as bookmakers’ odds suggest, then the economy should bounce back in the second half of the year.