Economic growth in the United Kingdom is expected to remain on a downhill in the upcoming months, following weak consumer spending amid a large reduction in business investment. Also, uncertainty and fears surrounding the European Union referendum on June 23 has not eased so far, adding to further projections for a downgrade, the British Chambers of Commerce (BCC) said on Monday.
The BCC forecasts the economy to grow 1.8 percent this year instead of 2.2 percent. The sequential growth in the third and fourth quarters of 2016 is forecast to slow down to 0.1 percent each. The projection for 2017 was trimmed to 1 percent from 2.3 percent. If the forecast for 2017 is realized, it would be the weakest rate of growth since 2009, the lobby noted.
Further, the country’s economic outlook for 2018 was downgraded to 1.8 percent from 2.4 percent. The downgrade indicates that the British economy will be GBP 43.8 billion smaller at the end of the forecast period than previously predicted.
In addition, spending in services is likely to remain the key drivers of growth through the forecasted period. Also, the BCC expects a further reduction in interest rates by the end of the year.
"The downgrades to our growth forecast confirm that the UK economy is set to enter a turbulent period, with growth expected to weaken materially in the near term," said Suren Thiru, Head of Economics, BCC.