2016 Economic And Investment Outlook For The United Kingdom

Albeit it labored, the economic recovery of the United Kingdom has been faster than most other G7 economies.

With a projected growth rate of approximately 3 percent forecast for 2016, London is expected to continue leading the country’s recovery. All other UK regions will also experience positive growth of up to 2.3 percent, and make important contributions to the ongoing prosperity, as well. Overall growth for the UK is expected to average 2.5 percent in 2016.

united nations' forecast uk growth rate

United Nations LINK Global Economic Outlook

Risks

The short term challenges to the region’s growth are primarily attributed to international risks, particularly in association with the relation to emerging markets, and the uncertainties related to the UK’s exit (Brexit) from the European Union.

UK firms also face considerable uncertainty – including global tensions, the stagnating Eurozone and the most wide open UK general election in decades. As we edge closer to the general election, businesses must keep focused on the fundamental strengths of our economy and Britain as a place to do business. – John Longworth, Director General of the BCC

According to a newly published survey by the Centre for Macroeconomics at the London School of Economics, 90 percent of economists at British universities believe that the UK leaving the EU would cause uncertainty in the markets and pose other economic risks.

Opportunities

Not to be discouraged, there are also many opportunities for investors if the global environment improves, and productivity growth rates accelerate in the UK. This should not pose much of a challenge considering that British officials say they are still on-track to meet their target of a budget surplus by 2019-2020.

Britain’s economy has expanded for the last 12 consecutive quarters and, according to estimate from the Organization for Economic Cooperation and Development, is on track to be the fastest growing economy in the G7 this year; as well as one of the 10 most competitive economies in Europe.

Outlook

The region’s ability to achieve long-term, sustainable growth depends on increasing the investment contribution, which is forecast to increase significantly in 2016 (7.2%) and in 2017 (7.4%), and improve export figures which are forecast to rise 2.6% for 2016 and 2017; as well.

For investors considering an investment in the country, the success of their investments in the United Kingdom will be dependent upon continued strength in corporate balance sheets and profitability, improved access to credit at low borrowing costs, and strong domestic demand from UK consumers; and of course, the result of the Brexit referendum in June 2016.

With the recent drag from uncertainty assumed to fade, companies are likely to resume their investment drive, putting healthy balance sheets and high profits to good use. – Peter Spencer Chief Economic Adviser, Item Club

Overview

The economic recovery demonstrated by the United Kingdom has been better than most of its other G7 peers, and is on track to be the fastest growing economy in the G7 this year.

Given that officials insist they are still able to meet their target of a budget surplus by 2019-2020, and the UK economy has expanded for the last 12 consecutive quarters, investors can look forward to strong and steady growth in the United Kingdom throughout 2016 and 2017.