The gross domestic product (GDP) in the United Kingdom (UK) will grow at a rate of 1.5 % in 2017 and 2018 and 1.3 % in 2019, with the tepid 2017 growth continuing next year, projects the Confederation of British Industry (CBI), UK’s top business organization providing a voice for firms at a regional, national and global level to policymakers. The CBI expects quarterly GDP growth of a subdued 0.3 % up to the end of 2019, unchanged from June and almost half the average rate of growth seen since 2013, according to a CBI press release.
The UK outlook remains subject to a high degree of downside risk, particularly in 2019, where a more disorderly outcome from Brexit negotiations could disrupt the economy and financial markets. “After a timid 2017, UK economic growth is set to remain steady but sluggish, with less pep than we’ve seen over the past few years,” the release quoted CBI chief economist Rain Newton-Smith as saying.
On the other hand the CBI expects domestic demand to remain soft, household spending under pressure from squeezed real wages and Brexit affecting business investment, but also foresees more support from net exports, buoyed by the lower pound and a resurgent global economy. The lacklustre rates of growth forecast are due to several years of persistently weak productivity, which is pushing down on the UK’s supply potential, said CBI.
“If the Industrial Strategy is to deliver better living standards, the UK needs a good Brexit. There is no point putting your foot to the floor on an Industrial Strategy while slow Brexit talks apply the brakes….Therefore, it is vital that progress is made in negotiations with Brussels, particularly in providing more clarity around transitional arrangements, so we can start to shape our new relationship with the EU,” Newton-Smith said.
CBI foresees the momentum of the global economy to remain solid, providing a supportive backdrop for economic growth in the UK. It expects the global economy to grow by 3.6 % in 2017, 3.7 % in 2018 and 3.4 % in 2019 on a purchasing power parity basis. With only a lukewarm pick-up in wage growth expected, living standards are set to stay under pressure in the country.