Stronger than expected growth in the third quarter (Q3) of 2016 has caused the British Chambers of Commerce (BCC) to upgrade its GDP growth forecast for this year and next.
The BCC now says that the UK’s GDP will be 2.1% for 2016, rather than the 1.8% previously expected, and that it will be 1.1% in 2017 instead of 1.0%.
Over the next two years, however, the current level of economic growth is set to slow the BCC argues, as continued uncertainty around the UK’s future relationship with the EU and higher inflation are expected to dampen growth in the medium term.
In response, it has downgraded its growth forecast for 2018 — from 1.8% to 1.4%.
Business investment is expected to fall by 0.8% in 2016, 2.1% in 2017 and 0.3% in 2018. Export growth is set to slow, the BCC goes on, from 4.5% in 2015 to 2.6% in 2016 and 2.3% in 2017. It should then pick up to 2.9% in 2018.
Data suggests that construction activity will fall by 2% in 2017; the services sector is predicted to grow by 1.7% in both 2017 and 2018; and manufacturing growth is expected to remain steady at 0.8% over both those years.
Commenting on the latest figures and forecasts, Dr Adam Marshall of the BCC said that, while many companies have been adopting a business as usual approach in the months since the June referendum, others now see an increasingly uncertain outlook.
Following the decision to leave the EU, it is imperative that the Government does all it can to help UK businesses overcome risk and take advantage of opportunities, Dr Marshall said.
Ministers should start by clarifying the future status of existing EU workers as soon as possible, he added, to end the insecurity now facing employees and businesses alike.