European Commission forced to upgrade UK growth forecast for 2017 but claims rest of EU will overtake post-Brexit Britain
THE EUROPEAN Commission has been forced to admit Brexit will not have the negative impact on the UK economy that they had previously predicted.
It has upgraded Britain’s growth forecast for 2017, but it still claims the rest of the EU will overtake us as our vote to Leave will eventually weaken the country.
The Brussels institution is the latest to say the impact of our vote to leave the EU will be milder than expected, after both the Bank of England and the OECD have revised their numbers.
The commission's figures in its Winter 2017 Economic Forecast project UK growth will be "moderate in 2017 and weaken further in 2018”, with an increase of 1.5% in 2017 slowing to 1.2% next year.
Its last set of predictions, last November, said the UK's economy would grow by just 1% this year and 1.2% next year.
But although the UK enjoyed "brisk" GDP growth of 2% last year, the commission warned the impact of the vote to leave the EU "has yet to be felt" and is expected to become apparent later this year.
It said EU growth is expected to head upwards, from 1.6% in 2014 to 1.8% in both this year and next, while the Eurozone forecast is upgraded from 1.5% to 1.6% for this year and 1.7% to 1.8% for next year.
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Economic Commissioner Pierre Moscovici named Brexit as a "significant downside risk" to the EU as a whole.
The Economic Forecast named the historic decision last June as one of a series of factors creating an "extraordinarily high level" of economic uncertainty across the continent.
Others include the upcoming elections in key EU states including France, possible protectionist trade policies in the US under Donald Trump and a "mounting backlash against globalisation".
But it said that global GDP growth is thought to have hit its low point last year and will strengthen this year and next, with growth outside the EU projected to pick up gradually from 3.2% in 2016 to 3.7% in 2017 and 3.9% in 2018.
The report forecast falling business investment and rising inflation in the UK over the period, while growth in disposable incomes and household consumption is expected to weaken.
But it predicted that UK exports will grow thanks to the decline in the value of sterling following the Brexit vote.
And growth in the UK has been "unbalanced" since last year's referendum, with healthy figures largely driven by consumers cutting back on saving in order to spend, said the report.
The report warned: "Given the lag between decisions to invest and actual investment, the impact of the result of the EU referendum is expected to become apparent later in 2017."
