The BCC has revised up its estimate for GDP growth in 2016 from 1.8% three months ago to 2.1%.
The ‘business as usual’ approach from UK companies after the Brexit vote has boosted UK growth this year – but that can’t last according to the British Chamber of Commerce.
The BCC has revised up its estimate for GDP growth in 2016 from 1.8% three months ago to 2.1%. However in 2017 the BCC expects growth to plummet to 1.1% in 2017 before reaching 1.4% in 2018.
With the uncertainty around the UK’s future relationship with the EU and higher inflation it said growth will dampen down in the ‘medium term’.
Suren Thiru, head of economics at the BCC, said: “We have upgraded our growth forecasts for 2016 and 2017, but the near-term outlook for the UK economy remains challenging, with the recent resilience in growth expected to weaken. That said, we do not expect the economy to enter into a recession over the next few years.
“Higher inflation and continued uncertainty over Brexit will weigh on the UK’s growth prospects, with consumer spending and business investment likely to be hardest hit. Average earnings should hold steady but inflationary pressures are expected to erode real wages, which will hit the spending power of households.
“Exports will continue to grow but at a slower pace, and the UK’s net trading position is expected to improve as import levels weaken. The decline in the value of the pound is likely to help some exporters, although the lack of responsiveness of UK exports to other sterling devaluations in recent years suggest that its impact on overall export growth has been overstated.
“Uncertainty remains over the longer-term outlook, but the UK’s structural imbalances, including the over reliance on services and household spending as drivers of growth, continues to leave the UK vulnerable to rapid changes in economic conditions.”
