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UK to see 3 years of low growth: Forecaster
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IANS | 15 Oct, 2018
The UK can expect low economic growth till 2021, while a no-deal Brexit could dent growth even further, says a forecasting body.
The
EY Item Club predicted GDP growth of 1.3 per cent in 2018 and 1.5 per
cent in 2019, down from 1.4 and 1.6 respectively, in its previous
outlook in July, the BBC reported.
The forecaster said these
figures were based on the assumption that the UK and the EU would agree
transition terms. If that did not happen, conditions could be
"significantly" worsen.
If the prediction turns out to be
accurate, 2018 would be the worst year of growth for the UK economy
since the financial crisis.
EY chief economist Mark Gregory said:
"The UK economy is going to experience a period of low economic growth
for at least the next three years, and businesses need to recognise this
and adjust accordingly.
"They should also consider a sharp
downside to the economy in the event of a no-deal Brexit and make
preparations for such a scenario."
Howard Archer, chief economic
adviser to the EY Item Club, said: "Heightened uncertainties in the
run-up to and the aftermath of the UK's exit could fuel business and
consumer caution.
"This is a significant factor leading us to
trim our GDP forecasts for 2018 and 2019." Earlier the EY had predicted
that the UK would see two interest rate rises in 2018 and two more in
2019.
However, following the Bank of England's decision in August
to raise rates from 0.5 per cent to 0.75, the forecaster said it did
not expect another increase until August 2019, with two more rate rises
likely in 2020.
"The EY Item Club suspects that the Bank of
England will want to see sustained evidence that the UK economy is
holding up relatively well after Brexit occurs in late March, before
hiking interest rates," it added.
Gregory said a "prudent
approach" would be for firms to test the robustness of their businesses,
especially cash flow, against a short period of severe disruption,
followed by a downturn for three or four quarters.
"Even if the
Brexit process goes smoothly, the cyclical risks to the UK economy mean
this would still be a worthwhile exercise. Now is the time to start to
think about the future shape of any UK business after 2020," he added.
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Customs Exchange Rates |
Currency |
Import |
Export |
US Dollar
|
66.20
|
64.50 |
UK Pound
|
87.50
|
84.65 |
Euro
|
78.25
|
75.65 |
Japanese
Yen |
58.85 |
56.85 |
As on 13 Aug, 2022 |
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