The Confederation of British Industry’s (CBI) latest economic forecast predicts that ratification of Theresa May’s Withdrawal Agreement and the resulting transition period will lead to steady economic growth in the UK, with a rise in business investment and continuing export growth over the next two years. Anna Tobin reports
If the UK successfully secures an orderly Brexit next year, with Theresa May’s Withdrawal Agreement being ratified, the CBI predicts UK GDP growth of 1.3% for 2018, 1.4% in 2019 and 1.6% in 2020.
The CBI says that this rise will be driven by a steady improvement in quarterly household spending growth – 1.4% in 2018, 0.8% in 2019 and 1.4% in 2020 – as real earnings start to rise; a pick up in business investment, as the weight of Brexit uncertainty lifts and the impact of spending on automation becomes more prominent; slightly more support from government consumption, following announcements of increased spending on the NHS in the last Budget; and, a growth in exports supported by global growth.
“An orderly Brexit next year would see the UK enjoy steady economic growth for the next couple of years. But as the range of recent impact studies show, a no-deal scenario would blow these figures out of the water, severely hurting businesses, jobs, and living standards,” warns Carolyn Fairbairn, the director-general of the CBI.
“The Government’s deal is not perfect. But it is the only offer on the table that can protect our economy, reduce uncertainty and open up a route to a decent trade deal in the future.
“Business has proved resilient in the face of great uncertainty ever since the referendum. Now – with no deal still a real possibility – nearly all firms with contingency plans will be advancing them by Christmas in the absence of some resolution to the Brexit process.
“Brexit has sucked the oxygen from the domestic agenda, where there are urgent issues to address. Crucially, improvements in people’s wages will only be sustainable with higher productivity. So firms will want to see the Industrial Strategy accelerate in 2019 and for the Government to use its’ Spending Review to set out a roadmap for delivering on its R&D spending target in partnership with business.”