The National Institute for Economic and Social Research said the economic slowdown in the UK is directly attributable to the vote to leave the European Union.
In one of a series of reports looking at the global economy published Wednesday, the organization said real household disposable income in the U.K. would have been more than 2 percent higher than it is today had Britain voted to stay in the EU.
“It is almost certain that the relative deterioration in the U.K. economy and the accompanying fall in living standards over the past year are a consequence of the vote by the British people to leave the European Union,” said NIESR’s Director of Macroeconomic Modelling and Forecasting Dr Garry Young.
NIESR also downgraded its forecast for U.K. economic growth this year and next, in what it described as a major divergence from the rest of the European economy which has seen growth pick up.
The forecast does not, however, suggest a crisis for the U.K. economy next year and indicates only a mild slowing of growth over the medium term as a result of Brexit.
Its central estimate is for GDP to grow by around 1.5 percent this year and in 2018, with inflation peaking at 3.2 percent in the final quarter of this year before easing back to the target rate of 2 percent in the second half of 2019. The think tank also expects the Bank of England will raise interest rates by 0.25 percent when it meets Wednesday. [...]
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The UK Economy - forecast summary
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