UK Car Sales Expected to Decline to 5.5 pc

According to a report, UK car sales are expected to decline for in 2018 alongside the softening of consumer expenditure. Moody’s corporation stated that new car registrations are set to slide down to 5.5 percent this year and made Britain as the "worst performing" market within the European economy. On the other hand, France, Germany, Italy, and Spain would likely take advantage. The ratings agency mentioned that the depreciation of the sterling pound since the Brexit referendum caused imported cars to become more costly. Also, Brexit-related skepticism had an impact on the decisions regarding consumer spending.

The Society of Motor Manufacturers and Traders (SMMT) reported that there were 2.7 million new car registrations in Britain during the year 2016, which shows five consecutive years that the market had increased. However, it slumped to 5.7 percent last year as consumers started to avoid polluting diesel vehicles as well as to shun making major expenses.

The Moody’s outlook indicates that the United Kingdom anticipated for 2.4 million new car registrations for the current year, which is equal to a more than 10 percent drop in two years and expected to see the same figures in 2019. However, registrations in Germany and Spain are predicted to escalate by 4.7 percent and 4 percent while growth in France and Italy will be 2.5 percent and 2.8 percent in 2018 accordingly. While the overall increase in Western Europe will grow by 0.5 percent.

Amid the recent squeeze on consumer expenditure, there are signals that the British economy performed better than previous forecasts. The Office for Budgetary Responsibility had an upward revision for UK economic growth in March from 1.4 percent in November up to 1.5 percent for 2018. The spending watchdog OBR further stated that inflation would reduce to 2 percent as the year ends which coincides with the target of the Bank of England.

Nevertheless, the Institute of Fiscal Studies which asserted that even the growth outlook was revised, the country will remain to be worst among the G20 economies. The influential think tank told that the slackening growth in GDP, earnings and productivity were adopted as the “new normal” since Britain continued to linger in the aftermath of 2008 financial crisis.