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Business

UK services bounce back despite Brexit

Opening sequence

Opening sequence

Business

UK services bounce back despite Brexit

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17:43
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COMING UP:UK services bounce back despite Brexit

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Transcript

00:00:01
>> The latest surprise in post-Brexit Britain, consumer confidence. Its biggest increase in over a year defying expectations and taking it back to pre-Brexit levels, as official statistics revealed on Friday. And there's more good news. As a whole, the UK service sector grew strongly in July, Rutger's David Milligan reports.
00:00:21
>> This suggests that sort sort of prospects for the services sector in the immediate future are relatively solid and that the British people are continuing to shop. Business activity's continuing, relatively as normal. However, there are some sort of clouds on the horizon. It's less clear sort of what business investment intentions are, but certainly a number of surveys pointing to sort of a slow down in that, which then will have a knock on impact on the services sector.
00:00:46
>> Another dark cloud is the prospect of inflation, expected to rise soon because of the fall in sterling's value post referendum. The Bank of England will have to weigh that with the economy's better than expected performance when it decides whether to cut the interest rate in November as planned, or sometime next year.
00:01:04
>> Most of the Bank of England still think that the economy is likely to slow quite sharply as of next year as sort of higher inflation starts to take hold, and consumers end up with less money in their pockets. And also, potentially, as an uncertainty about Britain's future within the European Union really weighs on business and plans for investment.
00:01:23
So from the point of view from some members of the Bank of England, it's still likely to be a case to cut rates before the end of this year.>> Another question is whether Brexit will be hard or soft. Nissan, calling on the UK government this week, for compensation over any tax barriers a hard Brexit would entail.
00:01:41
Nissan's plant in Northeast England accounts for a third of Britain's total car output. Remove that, and the economy may be easier to predict.