Abu Dhabi, UAEMonday 20 May 2019

UK only G7 economy to see growth decline last year

Office for National Statistics data show Britain moderated to 1.7 per cent from 1.8 per cent in 2016 as Brixt curtailed activity

Houses of Parliament. The UK has not enjoyed the economic uptick of other developed countries. Reuters
Houses of Parliament. The UK has not enjoyed the economic uptick of other developed countries. Reuters

The UK was the only Group of Seven country to see growth slow in 2017, according to the Office for National Statistics (ONS) in London.

As most major economies enjoyed a marked pick up in the best year for global growth since 2011, Britain moderated to 1.7 per cent from 1.8 per cent in 2016 as the decision to leave the European Union curtailed activity, Bloomberg reported.

The figures, highlighted in full National Accounts data published by the ONS Tuesday, underline the effect Brexit is having on growth. With fears mounting that Britain could leave the EU without a deal, the economy is expected to keep slowing this year. The median of forecasts this month is for an expansion of 1.3 per cent, compared with 2.2 per cent for the euro zone and 2.9 per cent for the US.

Growth last year was well below forecasts made before the 2016 referendum, when it was assumed that Britons would opt to remain in the EU. Still, the economy has performed better than some predicted in the immediate aftermath of the vote, a fact often cited by Brexit supporters.

Separately, Britain's markets watchdog said it will take no enforcement action against Royal Bank of Scotland over alleged mistreatment of its small business customers in the wake of the financial crisis, according to Reuters.

Some firms have said they were pushed into bankruptcy and that RBS's Global Restructuring Group (GRG) unit stripped their assets between 2008 and 2013. RBS has rejected the most serious allegations against the unit, but it has accepted some wrongdoing.

Andrew Bailey, chief executive of the Financial Conduct Authority (FCA), said on Tuesday that GRG was largely unregulated and the watchdog's powers to take action in such circumstances were very limited.

"Taking action was therefore always going to be difficult and challenging but after carefully considering all the evidence we have concluded that our powers to discipline for misconduct do not apply and that an action in relation to senior management for lack of fitness and propriety would not have reasonable prospects of success," Mr Bailey said.


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Firms and policymakers have criticised the FCA for not concluding its investigation into the GRG sooner.

The watchdog consulted with independent, external leading counsel, who confirmed that the FCA's conclusions were correct and reasonable, Mr Bailey said.

RBS chairman Howard Davies said the bank's board welcomed the FCA's decision, and continues to focus on ensuring past mistakes cannot be repeated.

"We ... will reflect carefully on its [the FCA's] findings to learn any further lessons from what was a hugely challenging time for the bank, its customers and the wider economy," he said in a statement.

Policymakers defied the FCA in February and published in full the watchdog's confidential report detailing mistreatment by the GRG during and after the financial crisis.

"I appreciate that many GRG customers will be frustrated by this decision but we have explored all the options available to us before arriving at this conclusion," Mr Bailey said.

"The fact that we can’t take action in no way condones the behaviour of RBS. We expect high standards from the firms we regulate and RBS fell well short in its treatment of GRG customers."

The FCA said it does have powers to ban individuals if it deemed they were not behaving in a "fit and proper" way, but it does not believe that a prohibition case would have reasonable prospects of success in this case.

RBS set aside £400 million (Dh1.93 billion) to compensate thousands of small businesses that said they were mistreated by the GRG.

The bank said this month however that the scheme would close to new complaints after paying out just £10m so far for direct losses.

RBS shares were trading about 1 per cent higher at 09.51 GMT.

Updated: July 31, 2018 03:20 PM