UK growth to slow to 0.8% in 2017, think tank Cebr predicts
The economy will grow at its slowest pace since the 2009 recession this year as soaring inflation and lacklustre wage growth bring an end to Britain's consumer spending boom, a report warned today.
A forecast by the Centre for Economics and Business Research (Cebr) shows growth pulling back sharply to 0.8% in 2017 - less than half the 1.8% expected for 2016. The prediction warns a surge in inflation to 2.7% this year will end the spending spree that has helped the economy put in a resilient performance since the Brexit vote.
Dampened investment by businesses fearful over the impact of Brexit will also hold back the pace of expansion, the Cebr said. But the report offered some cheer as it said the weak pound will boost manufacturers as it discourages UK firms from buying abroad and makes British goods cheaper for foreign buyers.
The Cebr also said that the jobs market would hold up well with the unemployment rate set to remain around 5.3%.
The report comes as a reminder of the challenges facing the economy after recent better-than-expected figures. Industry surveys last week pointed to a robust end to 2016, with the services sector purchasing managers' index (PMI) jumping to a 17-month high in December.
Economist Nina Skero said the UK was set for a "difficult year", adding: "In 2017, new challenges such as rising inflation will combine with existing ones including weak wage and productivity growth."