The U.K. economy will continue to expand at a tepid pace in 2018 and will weaken further in 2019, as household spending remains under pressure from squeezed real wages and Brexit uncertainty weighs on investment, the Confederation of British Industry said.
The CBI forecasts 1.5% economic growth this year and next, followed by 1.3% expansion in 2019.
"The lackluster rates of growth that we’re expecting come against the backdrop of several years of persistently weak productivity, which is pushing down on the U.K.’s supply potential," the CBI said, adding that the government's recently-announced industrial strategy could help, together with a relatively low pound and support from export demand, but would be insufficient on its own.
"If the Industrial Strategy is to deliver better living standards, the U.K. needs a good Brexit. There is no point putting your foot to the floor on an Industrial Strategy while slow Brexit talks apply the brakes," it said, adding that the U.K. economy remained subject to a high degree of downside risk, particularly, in case of a disorderly Brexit, in 2019 when the country is set to leave the EU.
The CBI's projections follow the British government's recent slashing of official economic growth forecasts for 2017 and the next four years, with 1.5% GDP growth expected in 2017, 1.4% in 2018, 1.3% in 2019 and 2020, and 1.5% in 2021.
