United Kingdom Economic Forecast

UK Economic Forecast

November 21, 2017

The economy continues to send mixed signals in the second half of the year. Recent data shows that growth in Q3 beat expectations, thanks to a resilient service sector and a jump in industrial production. In addition, both the services and manufacturing PMIs moved further into positive territory in October, while the unemployment rate remained at a multi-decade low in the third quarter. However, over the same period employment fell and the inactivity rate rose compared to Q2, hinting at a slight softening in a labor market which had remained rock-solid despite Brexit uncertainty. Growth has also lagged significantly behind the EU average since the start of the year, and with continuing negative real wage growth, private consumption is being fueled by consumers running down their savings. On the Brexit front, the UK government has yet to clarify its position on a financial settlement with the EU. Progress on this contentious issue must come before an EU summit on 14/15 December, if the EU-27 are to agree to move on swiftly to trade negotiations.

United Kingdom Economic Growth

Growth is likely to slow next year, as private consumption growth dips and fixed investment is dampened by pervasive uncertainty generated by Brexit. However, a stronger external sector and resilient global demand should cushion the slowdown. Our panelists estimate GDP growth of 1.3% in 2018, which is unchanged from last month’s forecast, and 1.4% in 2019.

United Kingdom Economy Data

20122013201420152016
Population (million)63.764.164.665.165.6
GDP per capita (USD)41,68142,46646,48443,96311,093
GDP (USD bn)2,6552,7223,0032,8622,629
Economic Growth (GDP, annual variation in %)1.31.93.12.21.8
Domestic Demand (annual variation in %)2.01.93.52.11.5
Consumption (annual variation in %)1.71.62.22.42.8
Investment (annual variation in %)2.33.26.73.40.5
Exports (G&S, annual variation in %)0.61.11.56.11.8
Imports (G&S, annual variation in %)2.93.42.55.52.8
Industrial Production (annual variation in %)-2.7-0.71.51.21.2
Retail Sales (annual variation in %)0.61.04.14.34.9
Unemployment Rate8.07.66.25.44.9
Fiscal Balance (% of GDP)-8.2-5.6-5.7-4.3-3.0
Public Debt (% of GDP)85.186.288.189.089.3
Money (annual variation in %)5.55.46.25.93.1
Inflation Rate (CPI, annual variation in %, eop)2.72.00.50.21.6
Inflation Rate (CPI, annual variation in %)2.82.61.50.00.7
Inflation (PPI, annual variation in %)2.11.30.0-  -  
Policy Interest Rate (%)0.500.500.500.500.25
Stock Market (annual variation in %)5.814.4-2.7-4.914.4
Exchange Rate (vs USD)1.631.661.561.471.23
Exchange Rate (vs USD, aop)1.591.561.651.531.36
Current Account (% of GDP)-3.7-4.4-4.7-  -  
Current Account Balance (GBP bn)-61.4-76.4-85.0-  -  
Trade Balance (GBP billion)-111.9-120.7-122.6-  -  
International Reserves (USD)88.692.495.7119124

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United Kingdom Facts

ValueChangeDate
Bond Yield1.27-3.04 %Dec 06
Exchange Rate1.34-0.35 %Dec 06
Stock Market7,348-0.26 %Dec 06

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