The UK will struggle to match the growth rates of its developed-country peers, as Brexit uncertainty starts to bite, finds EY ITEM Club’s Winter Forecast.
Key points include:
- GDP growth came in at 1.8% in 2017, a better performance than had been expected at the start of the year given Brexit uncertainties and the increasing squeeze on consumer purchasing power
- The GDP growth forecast for 2018 is raised from 1.4% to 1.7%. This reflects the stronger end to 2017 and the probability that the UK and EU will agree a transition arrangement in the first half to come into effect when Brexit occurs
- GDP growth projections for 2020 have been revised downwards (from 2.0% to 1.9%), 2021 (from 2.2% to 2.0%) and 2022 (from 2.3% to 2.1%) due to a modest downgrading of expectations for the UK’s productivity performance
- Business and consumer uncertainties may spike when the UK actually leaves
the EU in March 2019 while there are likely to be persistent uncertainties over the UK’s longer-term relationship with the EU.