Is the gloom on investment justified?

A slowdown in investment growth is one of the main factors underpinning the consensus expectation for economic growth to slow in 2018. That comes despite the fact that ordinary drivers of investment suggest that it will put in a decent performance. Instead, it seems that heightened uncertainty due to Brexit is the main factor weighing on expectations. But this has proven far less pervasive than most had assumed thus far. Of course, this could change as Brexit nears. And many forecasters appear to have assumed that this will be the case. But it seems equally likely that as negotiations progress and the UK’s future trading relationship with Europe becomes clearer, uncertainty will decrease. The upshot is that we expect GDP growth to surprise the consensus to the upside next year as investment growth remains solid and consumer spending growth picks up some pace.