United Kingdom Economic Forecast

UK Economic Forecast

January 30, 2018

The economy picked up pace in the final quarter of 2017, according to preliminary data. Services—particularly business services and finance—and manufacturing powered growth, with manufacturing likely boosted by buoyant external demand. However, consumer-facing sectors were limp amid a continuing decline in real wages. This fits with a picture of weak retail sales data in Q4. In addition, December’s service PMI highlighted subdued business confidence and investment, raising concerns about the sustainability of growth in the sector going forward. More positively, the labor market was surprisingly robust in August–November; there was a surge in job creation compared to the prior quarter, and the unemployment rate remained at a multi-decade low. On the international front, on 29 January the EU approved its directives for the next phase of Brexit negotiations, allowing discussions on a transition agreement to begin in earnest.

United Kingdom Economic Growth

This year the economy is likely to lose momentum as private consumption growth slows and fixed investment is curtailed by Brexit uncertainty. Public spending will provide little support, with the government intent on bearing down on the budget deficit. However, a robust global economy and still-loose monetary policy should buttress growth. Our panelists estimate GDP growth of 1.4% in 2018, up 0.1 percentage points from last month’s forecast, and 1.4% again 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 Yield1.58-3.04 %Feb 20
Exchange Rate1.11-0.35 %Feb 20
Stock Market7,247-0.26 %Feb 20

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