LONDON • Britain has edged closer to a no-deal Brexit that could deal another blow to an economy already strained by domestic uncertainty and a global slowdown.
Companies have consistently lobbied for a transition period when the nation leaves the European Union, yet Prime Minister Boris Johnson shrugged those calls off on Wednesday when he said he planned to suspend Parliament - the Queen has since approved this request - before taking the country out of the bloc on Oct 31.
The business community was quick to respond, warning that more political chaos will cause further pain in a country already on the brink of recession.
Here is how the economy looks.
The economy shrank in the second quarter, though that was largely payback after Brexit stockpiling at the start of the year. With so much "noise" in the numbers, it is hard to disentangle how much of the loss of momentum in the economy is down to a natural slowdown, weaker global demand or Brexit. The economy is forecast to rebound this quarter, but a chaotic departure from the EU would lead to a more serious downturn.
One area that has definitely taken a hit is investment, which has fallen for four straight quarters. Bank of England (BOE) governor Mark Carney says a Brexit deal will release some of that delayed spending, but some of it is lost for ever. The BOE's gloomy outlook for investment, predicated on some form of deal, sees it dropping 2 per cent this year and another 1.5 per cent in 2020.
The weaker pound has helped lift the share price of internationally exposed companies on the FTSE 100, though it has not triggered an export boom.
It has also attracted foreign buyers looking for bargains in the corporate sector. While some argue that this shows how Britain remains an attractive investment destination, the currency cannot be ignored as a big factor. The pound has lost 18 per cent against the dollar since the 2016 referendum. The number of overseas acquisitions of British companies jumped last year to the highest in at least 15 years.
THE BRIGHT SPOT
Jobs growth has continued apace in recent years, pushing unemployment to its lowest since the 1970s. It is also starting to feed through to wages. Annual growth has started to pick up and, importantly, pay is now outpacing inflation.
However, there have been some signs of Brexit jitters, with the latest data showing job vacancies falling to their lowest since early 2018.
Britain's dismal productivity performance shows little sign of going away. Annual productivity growth has averaged around 0.5 per cent since the financial crisis, compared with over 2 per cent before 2008, and more recently, has seen outright declines. Brexit could compound the problem by killing off some vital investment and reducing the inflow of skilled labour.