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UK slashes GDP growth forecasts, to allocate extra £3B for Brexit preparations

The British government lowered its official economic growth forecasts for 2017 and the next four years, U.K. Chancellor of the Exchequer Philip Hammond said in his Autumn Budget statement.

Hammond said the Office for Budget Responsibility, or OBR, is now expecting 1.5% GDP growth in 2017, down from a 2% growth forecast in March.

Economic expansion in 2018 is projected to be at 1.4%, compared with the previous 1.6% growth forecast. The economy is expected to grow 1.3% in both 2019 and 2020, lower than the March forecasts of 1.7% and 1.9%, respectively.

Growth in 2021 is seen at 1.5%, down from the previous 2% expectation. The OBR's forecast for 2022 was 1.6%.

Inflation is seen to fall back toward the 2% target over the next year, after peaking at 3% in this quarter, Hammond said.

The pound gained less than 0.3% to $1.3272 by 2:26 p.m. in London.

In his speech, Hammond also said that additional funds would be allocated to ensure that the U.K. is prepared for every possible outcome of the Brexit negotiations with the EU.

"We have already invested almost £700 million in Brexit preparations," he said. "And today I am setting aside over the next two years another £3 billion. And I stand ready to allocate further sums if and when needed."

The Financial Times reported on Nov. 21 that the U.K. and EU are aiming to agree on a Brexit divorce deal within three weeks as they prepare to thresh out issues such as Britain's financial settlement and the Irish border.