UK growth could slow over next three years
There has been much debate surrounding the effect a no-deal Brexit could have on the UK, given the significance of our EU membership on commerce. The EY ITEM Club, a forecasting body who look at potential economic scenarios have outlined a significant reduction in GDP growth as the most likely outcome.
The figures estimate GDP growth of 1.3% this year and 1.5% in 2019, could now fall to 1.4% and 1.5% respectively based on increasing uncertainty. The original figures outlined a transition deal with the EU, but given the increasing likelihood of no-deal transition the results have been revised.
Mark Gregory, EY chief economist stated: "The UK economy is going to experience a period of low economic growth for at least the next three years, and businesses need to recognise this and adjust accordingly.”
"They should also consider a sharp downside to the economy in the event of a no-deal Brexit and make preparations for such a scenario."
"Even if the Brexit process goes smoothly, the cyclical risks to the UK economy mean this would still be a worthwhile exercise. Now is the time to start to think about the future shape of any UK business after 2020.”
With the UK Prime Minister Theresa May’s position weakening as a result of continued friction to make a deal with all parties involved, we may soon even be looking at leadership challenge. If this happens, and the EU negotiations get put on hold, we could see these figures revised again.