Dun & Bradstreet UK industry report: Q2 2017
Conservative-led government secures support in parliament
A month after the inconclusive snap election result that led to the Conservative Party under Prime Minster Theresa May losing its absolute majority in parliament, a so-called ‘confidence and supply’ deal has been agreed upon between the Conservatives and the Democratic Unionist Party (DUP) from Northern Ireland. In exchange for generous financial transfer payments from the British government to Northern Ireland (over the coming years), the DUP’s ten MPs will provide the Conservatives with a parliamentary majority. Consequently, Dun & Bradstreet has upgraded the UK’s political environment outlook from ‘deteriorating rapidly’ (to which it had fallen immediately after the election) to ‘deteriorating.’
The impact of Brexit is still developing
Dun & Bradstreet has upgraded the UK’s political environment outlook from ‘deteriorating rapidly’ (to which it had fallen immediately after the election) to ‘deteriorating.’
Dun & Bradstreet is maintaining its baseline forecast scenario as a result of recent political events. We still expect the UK to leave the EU in March 2019, with a transitional arrangement in place until a free-trade deal comes into effect; without a transitional deal, the UK could experience significant turmoil. However, as implementation risks are high, we recommend monitoring the situation closely and frequently.
The UK economic forecast shows increasing inflation
Meanwhile, in the economic forecast, the outlook is cloudy. Inflation reached 2.9% in May, the highest value in four years. This led to a 1.2% fall in real wages in May, causing a decrease in living standards and weakened purchasing power. With inflation significantly exceeding the Bank of England’s (BoE) target rate of 2%, pressure on rate-setters is rising. Download the UK Quarterly Industry Report to better navigate the changing business landscape with first-hand recommendations from Dun & Bradstreet’s Country Insight Team.