Europe & Russia: Economic overview

June 2016

Most of Europe’s major markets achieved relatively stable economic growth at the start of the year, but uncertainties cloud the outlook.

The UK’s economy expanded by 2% on an annual basis in Q1 2016, a slight fall from the 2.1% growth seen in Q4 2015. There is the potential for a further dip in growth following the UK’s referendum on its membership of the EU on 23 June. Increased support for Brexit in the lead-up to the vote hit the pound and heralded further warnings of the economic damage a ‘leave’ could do to the UK and Europe as a whole. Polls in the days before the referendum show the vote is likely to be tight. If the UK does decide to exit the EU, a period of negotiations will drag out the uncertainty even further. How a potential EU exit will affect the UK’s gas market is unclear, but if it damages the economy then this will likely constrain energy demand growth and, consequently, the expansion of the gas market.