LONDON — The British Chamber of Commerce (BCC) thinks 2017 will be a year of reckoning for the UK’s economy, as growth comes crashing back to earth as a result of this year’s Brexit vote.
The head of the BCC, Dr Adam Marshall, told the BBC he believes that firm’s “business as usual” approach since June’s vote to leave the European Union has helped keep economic growth buoyant.
The BCC has upgraded its forecast for GDP growth this year from 1.8% to 2.1% but is predicting growth of just 1.1% next year, the lowest rate since the 2008 financial crash.
Dr Marshall said the forecast was driven by the pound’s collapse since the Brexit vote, telling the BBC: “Lower sterling and rising inflation are now starting to affect business communities and consumers across the UK.”
The fall in the pound makes imports more expensive, which is bad for manufacturers who rely on raw materials from abroad and consumers who will see supermarket prices rise. Inflation is already at its highest since 2014 and forecast to surpass the Bank of England’s 2% target next year.
However, the fact remains that Britain’s economy has fared much better than predicted in the immediate aftermath of the referendum. Most banks and think tanks forecast a recession for Britain if it voted to leave the EU but they have been forced to row back on those predictions.
Third quarter GDP growth came in higher than expected at 0.5%, against expectations of 0.3%. Kristin Forbes, a member of the Bank of England’s monetary policy committee, admitted in a speech last month that the economy has fared better than the central bank expected.
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