At a crossroads - Capital Economics
UK Economics

At a crossroads

UK Economic Outlook
Written by Capital Economics Economist
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Rising real wage growth should pave the way for a consumer recovery next year. At the same time, the lifting of Brexit-related uncertainty will set the stage for a sharp rebound in investment spending. This should allow GDP growth to quicken from a miserly 1.3% in 2018 to about 2% in 2019 and 2020. Note that this is predicated on our assumption of a “soft” Brexit, with a status quo transition period paving the way for a free trade agreement with the EU after this 21-month period. However, the risks are to the downside as the chances of a “no deal” Brexit have risen considerably over the past few months. Indeed, we think there is now an almost 50/50 chance that the UK leaves without a deal, which we estimate could knock off between 1 and 3ppts GDP growth next year, depending on the scenario.