United Kingdom Economic Forecast

UK Economic Forecast

February 27, 2018

Recent developments paint a nuanced economic picture. Q4 GDP growth was recently revised down, with solid public investment partially offset by timid private consumption and a negative contribution from the external sector. In addition, the manufacturing and services PMIs dipped in January on lower new orders. Encouragingly, in Q4 employment and nominal earnings growth increased, while productivity notched a second consecutive robust expansion. In addition, cumulative borrowing in the current financial year-to-date is down markedly from 2016/17, leaving the government on course to meet the 2.0% structural deficit target for 2020/21. On 22 February, the Brexit sub-committee met to agree a negotiating position which the Prime Minister should formally announce this week, although serious disagreements within the government remain. 62 Conservative MPs—enough to trigger a leadership contest—recently wrote a letter to the PM demanding a clean break from the EU and the ability to diverge from the bloc’s regulations after departure.

United Kingdom Economic Growth

This year the economy will likely lose momentum as private consumption growth slows and fixed investment is curtailed by Brexit uncertainty. Public spending will provide little support, with the government intent on reducing the deficit. However, a robust global economy and loose monetary policy should provide some support. Our panelists estimate GDP growth of 1.5% in 2018, up 0.1 percentage points from last month’s forecast, and 1.4% in 2019.

United Kingdom Economy Data

Population (million)63.764.164.665.165.6
GDP per capita (USD)41,68142,46646,48443,96340,093
GDP (USD bn)2,6552,7223,0032,8622,629
Economic Growth (GDP, annual variation in %)
Domestic Demand (annual variation in %)
Consumption (annual variation in %)
Investment (annual variation in %)
Exports (G&S, annual variation in %)
Imports (G&S, annual variation in %)
Industrial Production (annual variation in %)-2.7-
Retail Sales (annual variation in %)
Unemployment Rate8.
Fiscal Balance (% of GDP)-8.2-5.6-5.7-4.3-3.0
Public Debt (% of GDP)
Money (annual variation in %)
Inflation Rate (CPI, annual variation in %, eop)
Inflation Rate (CPI, annual variation in %)
Inflation (PPI, annual variation in %)  -  
Policy Interest Rate (%)0.500.500.500.500.25
Stock Market (annual variation in %)5.814.4-2.7-4.914.4
Exchange Rate (vs USD)1.631.661.561.471.23
Exchange Rate (vs USD, aop)1.591.561.651.531.36
Current Account (% of GDP)-3.7-4.4-4.7-  -  
Current Account Balance (GBP bn)-61.4-76.4-85.0-  -  
Trade Balance (GBP billion)-110.9-120.7-122.6-  -  
International Reserves (USD)88.692.495.7119124

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United Kingdom Facts

Bond Yield1.43-3.04 %Mar 15
Exchange Rate1.39-0.35 %Mar 15
Stock Market7,140-0.26 %Mar 15

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