EU slashes UK growth outlook due to Brexit ‘uncertainty’

The skyline of the City of London is seen on November 1, 2017. The Bank of England, on guard against soaring Brexit-fuelled inflation, is on the precipice of lifting its key interest rate November 2 for the first time since 2007, according to analysts. (AFP / Daniel Leal-Olivas)

BRUSSELS: The EU on Thursday slashed Britain’s growth forecast for this year and said the slowdown would continue through 2019 as uncertainties over Brexit weigh on the economy.
Growth in Britain had “slowed markedly” in 2017 and was projected to fall to 1.5 percent for the year, the EU said in its autumn forecast, down from 1.8 percent in its spring forecast.
The figure puts Britain’s economy joint lowest in the bloc with Italy, and far below both the dramatically upgraded euro zone forecast of 2.2 percent growth for 2017 and the wider EU outlook of 2.3 percent.
Britain’s growth was expected to tumble further to 1.3 percent in 2018, the same as in the spring forecast, and then to just 1.1 percent in 2019, a new prediction, it said.
“Economic growth in the UK has been slowing since the start of the year, as higher consumer prices constrained private consumption growth,” the EU forecast said.
“Based on a purely technical assumption of status quo in terms of trading relations between the EU27 and the UK, growth is still expected to remain subdued over the forecast horizon.”
The EU also warned that “uncertainty continues to weigh on business investment” in Britain.
The figures were released as a sixth round of the slow-moving Brexit negotiations began in Brussels.
The EU said however that it was difficult to make a firm forecast given that Brexit negotiations are still stuck on divorce terms and have not even moved on to discussing a future relationship.
“This is for forecasting purposes only and has no bearing on the talks underway in the context of the Article 50 process,” it said.