Will the UK Economy Hold up as Brexit Nears?

COMMUNITY ARTICLE

Will the UK Economy Hold up as Brexit Nears?

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.