You are here: Home - Investing - Experienced Investor - News -

UK economic growth downgraded

Written by:
The indecisive General Election result will hit confidence and dampen GDP growth, according to consultancy group the Centre for Economics and Business Research.

Meanwhile, uncertainty over Brexit is holding back business investment, which will also restrain economic growth.

The group revised its full year forecast for the UK economy lower by 0.4% for 2017 and 2018, but said growth may recover after that. It now expects the economy to grow by just 1.3% this year and 1.2% in 2018.

Lower consumer spending and business investment will be behind the slowdown in the short-term, but confidence should rebound if a deal is agreed with the rest of the EU. As such, the group’s forecasts for 2019 and 2020 are higher at 1.6% and 1.9% respectively.

The group said the Bank of England is unlikely to raise interest rates until the end of 2018 rather than earlier in the year as in its previous forecast.

The recent YouGov/CEBR Consumer Confidence Index show that sentiment fell from 109.1 in the week before the election to 105.2 in the fortnight after it. Consumer spending growth is likely to be only 1.5% this year compared with 2.8% in 2016. A further fall to 0.8% is likely for next year. A survey from the Resolution Foundation has found that wages are falling, which combined with greater inflationary pressures, is putting a squeeze on consumer spending.

Nina Skero, head of macroeconomics at CEBR, said, “Our data on confidence show that the newly-created political uncertainty is highly likely to weigh on growth in the short-term. This means that we now do not expect an interest rate rise until the end of 2018.

“But we now think that a deal with the EU on Brexit is more likely than previously seemed which will benefit both the UK and the remaining members of the EU. We have therefore revised up our forecasts for growth for the period from 2019 onwards.’

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Are you a first-time buyer looking for a mortgage?

Look no further, get the help you need by searching for your perfect mortgage

Five ways to get on the property ladder without the Bank of Mum and Dad

A report suggests the Bank of Mum and Dad is running low on funds. Fortunately, there are other options for st...

The essential Your Money guide to the April 2018 tax changes

As we head into the 2018/19 tax year, a number of key changes take place to existing policies while some new i...

A guide to switching energy provider

All you need to know about switching from one energy supplier to another.

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

Having a baby and your finances: seven top tips

We’re guessing the Duchess of Cambridge won’t be fretting about maternity pay or whether she’ll still be...

Protecting family wealth: 10 tips for cutting inheritance tax

Inheritance tax - sometimes known as 'death tax' - can cause even more heartache for bereaved families. But th...

Travel insurance: Five tips to ensure a successful claim

Ahead of your summer holiday, it’s important to make sure you have the right level of travel cover or you co... Awards 2018

Now in their 21st year, our awards recognise the companies offering the best products and services to consumers

Money Tips of the Week

Read previous post:
Revealed: The least affordable area for first-time buyers

It won’t come as much of a surprise to learn that the 10 least affordable Local Authority Districts (LADs) for...