The UK’s economic growth is expected to stay steady, but also remain subdued over the next couple of years. That’s the prediction being made by the CBI in its latest Economic Forecast. The “tepid growth” witnessed during 2017 is set to continue. The CBI’s view remains similar to that of last June, with the UK’s leading business group forecasting that GDP will burgeon at a rate of 1.5% for 2017, 1.5% in 2018 and 1.3% in 2019. The organisation fully expects quarterly GDP growth of a subdued 0.3% up to the end of 2019. That forecast is unchanged from June and almost half the average rate of growth observed since 2013.
Rain Newton-Smith, the CBI’s chief economist, said: “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. We expect domestic demand to remain soft. Household spending will remain under pressure from squeezed real wages, while in parallel Brexit uncertainty should weigh on business investment. Encouragingly, we should see more support from net exports, buoyed by the lower pound and a resurgent global economy.”
Newton-Smith continued: “The lacklustre rates of growth that we’re expecting come against the backdrop of several years of persistently weak productivity, which is pushing down on the UK’s supply potential. The Government’s newly-announced Industrial Strategy can help address this challenge and boost living standards, but the recent White Paper is just a first step. Consistency and determination will be needed to make this a long-lasting success.”
Adding to that theme, Newton-Smith observed: “If the Government’s Industrial Strategy is to deliver better living standards, the UK needs a good Brexit. There’s no point in putting your foot to the floor on an Industrial Strategy while slow Brexit talks apply the brakes. It’s already clear that Brexit is affecting business’ investment plans, with companies having to sensibly prepare for a possible ‘no deal’ scenario. Therefore, it’s vital that progress is made in negotiations with Brussels, and particularly so when it comes to providing more clarity around transitional arrangements such that we can start to shape our new relationship with the European Union (EU). Failure or deadlock would have an immediate impact on people’s lives. It’s time to put people and prosperity above political point scoring.”