Is the UK really "shackled to a corpse"?
Over the last year and change, the economic outlook for the Eurozone has improved dramatically while in that same time the UK economic outlook has left much to be desired. A little over a year ago, Brexit campaigners proclaimed that if the UK did not leave the European Union it would be "shackled to a corpse." A year on from the Brexit-vote and that looks far from the truth as the health of the Eurozone economy looks better than it has in some time.
Recently released economic forecasts from the European Commission project the UK economy growing the slowest of almost any EU country in 2019 when the country is set to leave the bloc. Read our latest economic outlooks for the UK and the Eurozone below to find out what we project.
Click on the image to see a larger version
Eurozone Economic Outlook
Incoming data suggests that the Eurozone’s economy continued to fire on all fronts in the third quarter of 2017. Industrial production surged in August, and economic sentiment surged to the highest level since 2001 high in October. In addition, the unemployment rate hovered at a multi-year low in August and robust external demand has boosted exports, despite a strong euro. All-in-all the economy is on track to record the fastest annual growth since before the financial crisis. On the political front, the situation has become more turbulent in recent weeks, which could increase uncertainty in the region. In Spain, an independence movement in Catalonia has led to clashes between regional authorities and the central government. Escalating tensions along with public demonstrations could take a toll on economic activity in the region in the coming weeks. Meanwhile, Austria shifted to the right in its 15 October elections, and Brexit negotiations have yielded little progress so far.
FocusEconomics analysts expect the Eurozone to grow a healthy 1.9% in 2018, which is up 0.1 percentage points from last month’s estimate. A stronger labor market should support robust growth as the common-currency bloc puts the crisis behind it. However, slower exports growth should take a bite out of the momentum. In 2019, GDP is seen expanding 1.6%.
United Kingdom Economic Outlook
The UK economy continues to chug along, with both the manufacturing and services PMIs staying well in expansionary territory in September, and the unemployment rate at a multi-decade low. However, consumers are still smarting as higher inflation digs ever deeper into real wages, evidenced by disappointing retail sales in September. In order to boost the purchasing power of young people, the government recently promised GBP 10 billion to help them purchase a home, and announced a more generous system of tuition fee repayments. Clarity over how these new spending measures will be funded should come in November’s budget. On the international front, Brexit negotiations are at an impasse. In September, Prime Minister Theresa May outlined proposals for a two-year transition period, during which time the UK would enjoy unfettered access to the single market. However, talks on such a transition deal are yet to begin, with both sides still locking horns over a financial settlement. The longer the preliminaries drag on, the thicker the fog of uncertainty becomes, with consequent risks to investment.
Growth is likely to slow next year, with fixed investment paralyzed by the ever more pervasive uncertainty generated by Brexit. However, a stronger external sector and resilient global demand should cushion the slowdown. Our panelists estimate GDP growth of 1.3% in 2018, which is unchanged from last month’s forecast, and 1.5% in 2019.
If you'd like to get more data, written analysis, Consensus Forecasts on 30+ macroeconomic indicators for 127 countries, click on the button below to download a free sample of the FocusEconomics Consensus Forecast Report.
5-year economic forecasts on 30+ economic indicators for 127 countries & 33 commodities.
Disclaimer: The views and opinions expressed in this article are those of the authors and do not necessarily reflect the opinion of FocusEconomics S.L.U. Views, forecasts or estimates are as of the date of the publication and are subject to change without notice. This report may provide addresses of, or contain hyperlinks to, other internet websites. FocusEconomics S.L.U. takes no responsibility for the contents of third party internet websites.
Date: November 1, 2017
TagsVenezuelaRussiaHealthcareEastern EuropeCentral AmericaGreeceMENAUSAHousing MarketAgricultural CommoditiesUnited StatesVietnamBase Metals CommoditiesUnited KingdomForexBitcoinSub-Saharan AfricaEuropean UnionOPECBanking SectorSpainFranceCommoditieselectionOilTunisiaCompany NewsUKTradeGDPMexicoEuro AreaChinaEurozoneInfographicAustraliaBrexitAfricaJapanEmerging MarketsAseanColombiaPortugalUkraineIranTurkeyIMFCanadaGermanyoil pricesAsian Financial CrisisConsensus ForecastArgentinaAsiaIndiaEnergy CommoditiesUnemployment rateG7InvestmentItalyCryptocurrencyprecious metalsExchange RateInflationEconomic DebtGoldSouth AfricaBrazilLatin AmericaPrecious Metals CommoditiesEconomic CrisisMajor EconomiesTPPEconomic Growth (GDP)TPSNordic Economies
Angola: Economic sentiment improves to four-year high in Q2. https://t.co/xzKQOhHWVO
15 hours ago
15 hours ago
Italy: New coalition avoids snap vote, but structural reforms and political stability likely to remain elusive. https://t.co/7razMhYDtd
16 hours ago
Switzerland: SNB leaves ultra-loose monetary policy in place in September. https://t.co/M3WuycqqYh
17 hours ago
Australia: Despite sustained job creation, unemployment rate hits one-year high in August. https://t.co/BtVJzbE0sx
17 hours ago