BRITAIN’S economy is set to suffer “a severe loss of momentum” following Britain’s decision to exit the European Union, with investment and consumer spending likely to slow, a think thank has said.
The EY ITEM Club has slashed its forecasts for UK economic growth, predicting “anaemic” GDP activity for the next three years with the uncertainty from the Brexit vote likely to drive up unemployment and puts the brakes on consumer spending and business investment.
While the think tank stopped short of forecasting recession, it slashed its growth projections for this year from 2.3 per cent to 1.9 per cent. For 2017 it projected miniscule growth of just 0.4 per cent, having previously predicted 2.6 per cent prior to June’s dramatic vote. For 2018 it forecast growth of 1.4 per cent, as compared with 2.4 per cent in its previous reports.
The findings are published on the same day that leading consultancy firm Deloitte reported that business confidence among the country’s chief financial officers was at the lowest levels on record, lower than those seen at the height of the economic crash of 2008.
Stuart Watson, Yorkshire & Humberside Senior Partner at EY,said: “Undoubtedly the next couple of years will be challenging for the UK economy. The UK government will need to quickly introduce measures to help offset Brexit blues, support the economy and continue to attract foreign investment. The focus now needs to be on making sure that the UK negotiates the right trade deals that will allow access to key markets. There are numerous opportunities for the economy to remain not only open for business but also attractive, competitive and connected.”
The report did not forecast entirely negative economic activity, with the plunge in the value of the pound now predicted to bolster exports by 3.4 per cent next year, with imports falling 0.3 per cent.
The EY ITEM Club also said the consumer would not emerge from the fallout unscathed, saying it expects the Monetary Policy Committee (MPC) to cut interest rates to zero by November but says that inflation is likely to rise above 2 per cent by the end of this year.
Meanwhile ministers are today urged to address the post-Brexit concerns of tech companies who fear losing EU workers to other countries in the bloc. The Business, Innovation and Skills Committee said ministers should set out the impact of the vote to leave the EU on firms’ high-skilled European employees.
The tech sector is an area of rapid growth for Yorkshire’s economy with the number of digital jobs in Yorkshire increasing at a rate 10 times faster than their non-digital counterparts.
The post Brexit unease appears to have spread to the High Street too, with the number of shoppers on the country’s streets seeing the sharpest fall in more than two years in June. The British Retail Consortium Footfall and Vacancies Monitor said retail footfall was down by 2.8 per cent in June on a year ago, the biggest decline since February 2014.
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