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The British Economy Showing Sign of Improvement Thanks to Brexit Clarity

The start of 2020 has seen hopes rise that the UK’s economy is improving. This is largely based on the greater clarity over Brexit achieved following the election win for Boris Johnson. Recent studies also reveal modest improvements at the end of 2019.

While the numbers show that certain industries are still struggling, there are signs that the year ahead could be more positive. 

Improvements in the Service Industry

These latest figures come from a market study that shows that the services sector became more stable in December. This also showed that order books improved and optimism levels climbed too.

The importance of the services sector is shown in the fact that it currently makes up 80% of the British economy. The purchasing managers’ index in this area rose from 49.3 to 50.0 during the final month of the year. This is important because 50 is the figure that separates growth from contraction in the economy. While these numbers show that it was a flat December for services, this is an improvement on the three months of contraction that were seen before this month. It had been expected that the service industry numbers would show further decline in December, so these results are a welcome boost. 
The services sector is one of the key elements of the British economy. Therefore, it is hoped that a climb into growth here could lead to improvements in other sectors too. 

New Car Sales Boost

Another important piece of news came with the rise in new car sales. A 3.4% year on year increase in December was noted. However, last year’s overall numbers showed a 2.4% drop in this area. 2.31 million new car sales made it the poorest performance since 2013.  

The UK’s future relationship with European car manufacturers and markets is a key issue going forward. Some other European countries have had sluggish performances in 2019, notably Germany.  This has seen some companies put an emphasis on the debt collection process.

Unlike service, manufacturing and construction are both still shrinking. They returned numbers of 47.5 and 44.4, respectively. This meant that the private sector overall reported figure was 49.3. Bearing this in mind, the threat of recession is still present.

Expectations for the Future

Business confidence in the UK has grown following the election. It has been reported that expectations of future growth are now higher than they have been in over a year. This shows that companies are now expecting 2020 to be stronger than 2019. 

Other positive indicators include employment figures improving and more new orders coming in. In addition, it is hoped that the services sector now moves into growth in 2020 and that the likes of construction and manufacturing begin to recover. 

These figures give us a glimpse of relatively modest improvements in the UK economy. Yet, the rising levels of optimism suggest that 2020 could be a better year than the year that has just ended.