United Kingdom Economic Forecast

UK Economic Forecast

April 30, 2019

The economy likely performed better than previously anticipated in Q1, although this was partly due to a favorable base effect and firms stockpiling in preparation for a potential no-deal Brexit at end-March. Solid GDP growth in January and February was supported by manufacturing and construction. Moreover, in December-February the unemployment rate remained at a multi-decade low, while wage growth was robust. This was likely behind buoyant retail sales in the first quarter, despite anemic consumer confidence. However, the economy is likely losing momentum so far in Q2 as the boost from stockbuilding unwinds. On the political front, the EU recently agreed to delay Brexit until 31 October after MPs failed to agree on a way forward. A resolution to the impasse does not appear imminent, and the ongoing uncertainty will continue to hamper business confidence and investment going forward.

United Kingdom Economic Growth

Growth this year will be held back by muted business investment and ebbing momentum in key trading partners such as the EU and U.S. However, the strong labor market should prop up private consumption, while the fiscal stance will turn more supportive. The highly uncertain outcome of Brexit remains the key risk to the outlook. FocusEconomics panelists expect GDP growth of 1.3% in 2019, which is unchanged from last month’s forecast. For 2020, panelists see the economy expanding 1.4%.

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United Kingdom Facts

Bond Yield1.10-3.04 %May 13
Exchange Rate1.30-0.35 %May 13
Stock Market7,164-0.26 %May 13

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