The UK economy has slowed since the end of 2016. The annual rate of GDP growth in the third quarter of 2017 fell to just 1.5 percent, the weakest performance since 2013. This figure is a downgrade from the 2 percent expansion that the UK’s Office for Budget Responsibility estimated in March of 2017. GDP growth in the coming year (2018) is expected to fall further to 1.4 percent.
The United Kingdom is set to formally leave the European Union in March 2019. The opinion of the vast majority of economists is that the exit from the EU will inflict long-term damage on the UK economy. According to a new analysis, Brexit has already inflicted damage totaling nearly £20 billion on the UK economy. This is the equivalent to approximately £300 million a week since the June 2016 referendum. The economists polled insist their estimates show the evolving costs of Brexit “in an unbiased, transparent, and entirely data-driven way”.
A spike in UK inflation, stemming mainly from the record slump in sterling in the immediate wake of the Brexit vote, has hit real household incomes and curbed consumer spending. A report by the London School of Economics’ Centre for Economics Performance delivered in November 2017 estimated that the Brexit-related spike in inflation in the UK had already cost the average UK household approximately £400 a year. This has come at a time when the UK’s peer developed economies in Europe and the United States have seen strong growth.
Surveys conducted since the Brexit vote also show that UK companies have been putting their investment plans on hold, while they wait to see the outcome of the UK’s negotiations with the rest of the European Union. Most businesses and investors have voiced their concern over the implications for future trade arrangements.