Recent news on the UK economy, including the downward revision to Q4 GDP growth, appears to have lent more support to the consensus forecast of slower growth in 2018 than to our prediction of an acceleration. But it’s too early to throw in the towel.
Not only was Q4’s slowdown at least partly down to temporary factors, but there are some more fundamental reasons to expect growth to pick up this year. We therefore stick to our forecast of growth of about 2% in 2018, allowing the MPC to withdraw its policy support a bit more quickly than financial markets currently anticipate.
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