Financial development within the UK this yr has been “timid” and can keep “regular however sluggish” in 2018, the CBI has stated.
The enterprise group says development might be “tepid” amid Brexit uncertainty, whereas family spending will stay beneath strain from squeezed wages.
The CBI expects subdued quarterly GDP development of zero.three% till the top of 2019 – nearly half the expansion charge since 2013.
The physique expects GDP to broaden by 1.5% in each 2017 and subsequent yr, and fall to 1.three% in 2019.
It additionally argues that CPI inflation peaked at three% in October, and may now ease progressively.
“After a timid 2017, UK financial development is about to stay regular however sluggish, with much less pep than we have seen over the previous few years,” stated Rain Newton-Smith, the CBI’s chief economist.
Whereas home demand would stay tender, she stated there have been encouraging financial indicators, together with extra assist from exports, which have been buoyed by the decrease pound and a resurgent international economic system.
“The lacklustre charges of development that we’re anticipating come towards the backdrop of a number of years of persistently weak productiveness, which is pushing down on the UK’s provide potential,” added Ms Newton-Smith.
“The federal government’s newly introduced Industrial Technique may help handle this problem and enhance residing requirements, however the latest White Paper is only a first step – consistency and willpower is required to make this a long-lasting success.”
The CBI stated it was clear Brexit was affecting enterprise funding plans, with corporations having to arrange for a “no-deal” state of affairs.
Alpesh Paleja, the CBI’s principal economist, added: “The worldwide economic system is firing on all cylinders, with the upturn in development changing into extra broad-based. We anticipate this to proceed within the near-term, which can present a supportive backdrop for commerce and financial development within the UK.
“Coupled with a decrease pound, now is an efficient time for companies to have a look at new exporting alternatives the world over.”
It comes as a research by producers’ organisation the EEF discovered that demand for items from European markets specifically was compensating for a weaker place within the UK.
Lee Hopley, EEF chief economist, stated: “Stronger international development has cemented the foundations for development in manufacturing this yr, however the sector’s contribution to the UK economic system has been larger than most anticipated.”
She added: “There’s some confidence that this momentum will carry into 2018, however as we head in direction of the Brexit finish sport we’d like manufacturing to provide the identical trick.”