“This year will be a year of brinkmanship, tipping us into recession in early 2018, with unemployment rising from late 2018. Wages will likely stagnate into 2018 and we may even see a real-terms fall, if the labour market responds as it did following the 2008 recession. This suggests any rise in unemployment will be limited, as wages ‘adjust’, but favourable economic news from the continent will slow the supply of EU talent to a recession-hit UK. Employers need to get their strategies in place now, before the storm hits.
“Evidence suggests that the UK economy is slowing, with growth of 0.3% between January and March much less than expected. Rising prices and low wage growth are the most likely cause of a 1.8% fall in retail spending in March. It is difficult to say whether this is a blip or the first signs of a slump, but initial Brexit exchanges suggest the European Commission will be given free rein in negotiations, and this risks a serious downturn in the UK.
“Both the European Commission (EC) and the member states of Europe have a shared interest in ensuring a Brexit that does not favour the UK; but the member states interest in tempering this, to avoid negative economic impacts across Europe, is not shared by the EC. Recession in the UK would strengthen the hand of EC negotiators and it is therefore a realistic prospect for the start of 2018.”
