UK economic growth for the year is expected to falter this year, slipping from the 1.8% growth recorded in 2016 to just 1.5% this year, as uncertainty surrounding Britain’s future relationship with Europe takes its toll.
Research undertaken for PwC’s latest UK Economic Outlook forecast projects a further dip in GDP growth to just 1.4% in 2018 as the professional services giant factors in the combined effects of rising inflation and falling wage packets on the capacity of British consumers to shop.
John Hawksworth, PwC's chief economist, remarked: “Brexit-related uncertainty may hold back business investment, but this should be partly offset by planned rises in public investment. Fiscal policy could also be further relaxed in the 2017 Autumn Budget to offset the ongoing real squeeze on household spending power.
“There are still downside risks relating to Brexit, but there are also upside possibilities if negotiations go smoothly and the recent Eurozone economic recovery continues. We expect the UK to suffer a moderate slowdown, not a recession, but businesses should be monitoring this and making contingency plans.”
UK growth slumped from a healthy 0.7% over the final three months of 2016 to just 0.2% in the first quarter, fueling concerns that a pay squeeze was beginning to bite, hitting the dominant services sector of the economy.