UK to have weakest growth of all 28 EU countries over next two years, European Commission forecasts
The commission said even its downbeat outlook was based on a ‘benign’ scenario, of UK trade with the rest of the European Union continuing uninterrupted
UK economic growth will be the weakest in the European Union over the next two years and the risk of a chaotic Brexit means the outlook could be even worse, the European Commission has warned in its latest forecasts.
In its autumn projections the commission estimates growth this year will come in at just 1.3 per cent, down from 1.7 per cent in 2017.
It expects growth in 2019 – when we are due to leave the EU – to slump to 1.2 per cent, with the same again in 2020.
No country in the EU except Italy – which is in a stand off with the commission over its national budget – is projected to have growth as weak in 2019. The UK’s projected performance in 2020 is the weakest of the 28 nations currently in the bloc.
The UK forecasts are worse than those made by the UK’s Office for Budget Responsibility, which in last week’s Budget projected growth in 2019 of 1.6 per cent, followed by 1.4 per cent in 2020
Bottom of the growth league
The commission also stressed that even its downbeat outlook was based on a “benign” scenario of UK trade with the rest of the European Union continuing uninterrupted.
“The risks to the 2019 and 2020 baseline forecast are large, and predominantly to the downside”, the commission said.
The commission said consumer confidence surveys suggested weak spending by households, adding Brexit uncertainty was likely to keep business investment “subdued”. It expects net trade to continue to drag on UK growth and sees the UK unemployment rate rising to 4.7 per cent by 2020, up from 4 per cent today.
The commission projected the eurozone’s growth to slow too over the coming years.
Growth in the single currency area hit 2.7 per cent in 2017, the highest since 2006.
The Brussels-based commission expects GDP growth in 2018 to slow to 2.1 per cent, followed by 1.9 per cent in 2019 and 1.7 per cent in 2020. It blamed rising global uncertainty, Donald Trump’s trade wars and higher international oil prices.
“Uncertainty and risks, both external and internal, are on the rise and start to take a toll on the pace of economic activity. We need to stay vigilant and work harder to reinforce the resilience of our economies,” said Valdis Dombrovskis, commission vice-president for the euro, said.