Yahoo Finance Brexit blamed as UK forecast to be slowest growing economy in Europe
Brexit will play a part in making the UK the slowest growing economy in Europe over the next two years, according to the European Commission’s annual growth forecast.
UK GDP growth is expected to be 1.3% this year – ahead of just Italy and Denmark among the EU 28 countries.
But growth is expected to slow to 1.2% when the UK leaves the EU next year, making it the joint-slowest growing economy alongside Italy.
And the UK it set to be left bottom of the league in 2020, when Italian growth surpasses that of the UK, which is forecast to remain at 1.2%.
That is set to spark a “modest rise” in the unemployment rate, up from 4.3% this year to 4.7% in 2020. That will still be well below the EU27 average of 6.6%.
Unveiling the results in Brussels, EU economics commissioner Pierre Moscovici said of the UK’s prospects: “Private consumption growth is forecast to remain weak as real wages grow modestly and households look to maintain savings.
“Heightened uncertainty means that business investment growth is likely to remain constrained.”
Growth forecast in 2019:
🇲🇹 4.9
🇮🇪 4.5
🇸🇰 4.1
🇷🇴 3.8
🇵🇱 3.7
🇧🇬 3.7
🇨🇾 3.5
🇭🇺 3.4
🇸🇮 3.3
🇱🇻 3.2
🇱🇺 3
🇨🇿 2.9
🇪🇪 2.8
🇭🇷 2.8
🇱🇹 2.8
🇳🇱 2.4
🇪🇸 2.2
🇫🇮 2.2
🇦🇹 2
🇬🇷 2
🇪🇺 1.9
🇩🇪 1.8
🇸🇪 1.8
🇩🇰 1.8
🇵🇹 1.8
🇫🇷 1.6
🇧🇪 1.5
🇮🇹 1.2
🇬🇧 1.2#ECForecast https://t.co/fRe13nc5fC— European Commission 🇪🇺 (@EU_Commission) November 8, 2018
The commission’s detailed country report for the UK specified that weak growth in business investment “is largely due to ongoing uncertainty over the UK’s future trading relationship with the EU.”
Moscovici also suggested the UK’s economic performance could be worse than forecast if Brexit negotiations don’t produce a trade arrangement that maintains the same market access.
“Let me remind you that this forecast is once again based on a purely technical assumption of status quo in terms of trading relations between the EU27 and the UK,” added the French politician.
The commission’s UK report is more explicit: “As this purely technical assumption implies a relatively benign scenario, the risks to the 2019 and 2020 baseline forecast are large and predominantly to the downside.”
EU supporters said the figures added weight to their call for a second referendum.
“Thanks to the Tories hard Brexit, Britain is the economic sick man of Europe once again,” said Liberal Democrat MEP Catherine Bearder. “It doesn’t have to be this way.”
But Brexit wasn’t the only thing slowing UK growth – the commission also singled out poor weather and low wages as contributing factors.
Green MEP Molly Scott Cato said: “This projection says more about the failure of Conservative government economic policy than leaving the EU.”
Growth across the rest of the EU is also due to fall from 2.2% this year to 1.9 in 2020.
