in World Economy News 05/11/2016
The British economy is facing a sharp squeeze as accelerating inflation hampers consumer spending following the vote to exit the European Union, Allied Irish Banks Chairman Richard Pym said.
“Some have surprised by the continued growth in the U.K. economy, ” Pym said in a speech Friday in Kilkenny, southeast Ireland. Comparing Britain to the Wile E. Coyote character in the “Road runner” cartoon, he added: “momentum carries the creature forward for a time before gravity has its inevitable victory.”
The Bank of England raised its growth forecasts this week after the economy showed unexpected resilience to the June Brexit vote, expanding 0.5 percent in the third quarter. Still, the plunge in the pound is fanning inflation, threatening to put pressure on real incomes.
“Once consumers find their wallets constricted, the U.K. economy will look very different,” said Pym, who is English and opposed to leaving the EU. In 2014, he became chairman of AIB, which controls 40 percent of the Irish banking system.
Pym said that the U.K. government has no plan on Brexit, and hoped there would be a second vote to reverse the referendum vote, something Prime Minister Theresa May has ruled out.
Source: Bloomberg
