11 December 2017

BCC forecast: Uncertainty constraining UK economic growth

The British Chambers of Commerce has slightly downgraded its three-year outlook for the UK economy, cutting growth expectations from 1.6% to 1.5% in 2017, from 1.2% to 1.1% in 2018, and from 1.4% to 1.3% in 2019.

Key points in the forecast:

• UK GDP growth forecast for 2017 is downgraded from 1.6% to 1.5%, and is expected to slow to 1.1% in 2018 (downgraded from 1.2%), before rising to 1.3% in 2019 (downgraded from 1.4%). Quarter-on-quarter growth in Q4 2017 is forecast to slow slightly to 0.3%
• Export growth is expected to grow at 4.3% in 2017, 3.1% in 2018 and 2.9% in 2019 as global growth drives international demand, while import growth is expected to grow by 3.7% in 2017 2.7% in 2018, and 2.9% in 2019. This leaves our net trade position weaker across the forecast period than we previously forecast in Q3.
• Productivity is expected to grow by 0.5% in 2017, 0.6% in 2018 and 0.5% in 2019
• Inflation of 2.7% is forecast for this year, and 2.8% and 2.5% in 2018 and 2019 respectively. Inflation is expected to peak at 3%in the final quarter of 2017, in line with our previous forecast
• Our new forecast is that the next increase in UK official interest rates, to 0.75%, will occur in Q4 2019
• Growth in consumer spending is expected to slow from 1.6% in 2017 to 1.0% in 2018, before rising to 1.3% in 2019
• Business investment growth has been upgraded from 0.4% to 2.1% for 2017 as a result of revisions to ONS data, but is expected to slow to 0.8% in both 2018 and 2019
• Looking at sectors, manufacturing growth has been upgraded from 1.4% to 2% in 2017, and is expected to grow at 0.9% and 1.1% in 2018 and 2019. Construction growth has been revised upwards for 2017 from 1.3% to 3.2%, and is expected to grow at 0.5% and 1.0% thereafter. Services sector growth has been downgraded from 1.8% to 1.7% in 2017, and is forecast to grow at 1.3% and 1.6% in the following years
• Public sector net borrowing is expected to total £52.7 billion in 2017, £47.8 billion in 2018 and £36 billion in 2019.

Full press release

© BCC - British Chambers of Commerce