United Kingdom Economic Forecast

UK Economic Forecast

March 26, 2019

The economy appears to have grown meagerly in Q1 against a backdrop of heightened Brexit uncertainty, with the services and manufacturing PMIs hovering only slightly in expansionary territory in the first two months of the year amid soft new orders. More positively, in the three months to January employment surged, the unemployment rate dipped, and wage growth remained at a multi-year high. The strong labor market should have supported private consumption in Q1, as suggested by healthy retail sales growth in January and February. On the political front, the EU recently agreed to delay Brexit until 12 April, although there is still no clarity over the final outcome of the process. Earlier in March, the chancellor presented his Spring Statement, highlighting stronger-than-expected public finances and suggesting a looser fiscal stance if the UK leaves the EU with a deal.

United Kingdom Economic Growth

The outlook for 2019 hinges on the outcome of Brexit; leaving the EU with a deal, or remaining in the EU, would likely unleash pent-up investment and boost consumer sentiment, while leaving with no deal could cause a serious economic shock. An extension to Article 50 would prolong uncertainty and thus continue to hamper investment. Met the why particular panelists expect GDP growth of 1.3% in 2019, which is down 0.1 percentage points from last month’s forecast. For 2020, panelists see the economy expanding 1.5%.

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United Kingdom Facts

Bond Yield1.21-3.04 %Apr 12
Exchange Rate1.31-0.35 %Apr 12
Stock Market7,437-0.26 %Apr 12

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