The Office for National Statistics has put a figure on the projected impact on UK growth following the decision to leave the EU.
Delivering the Autumn Statement today, Chancellor Philip Hammond says while “we cannot predict the deal we will strike” on Brexit, the ONS says potential growth will be 2.4 per cent lower than had otherwise been the case if we were not leaving the EU.
The forecast for UK GDP growth has been slashed to 1.4 per cent in 2017 compared to 2.2 per cent in the March budget.
The forecasts for the years following have also been cut to 1.7 per cent in 2018, and 2.1 per cent for 2019 and 2020. In 2021, Hammond says the forecast currently sits at 2 per cent.
At the last forecast each of the three years had been forecast to see GDP growth of 2.1 per cent.
This year’s Autumn Statement comes exactly five months since the UK voted to leave the European Union.
However, the forecast for 2016 is 2.1 per cent up from 2 per cent forecast in March.
The economy has held up better than forecast in the immediate aftermath of the Brexit vote.
GDP growth only slowed to 0.5 per cent quarter-on-quarter in the third quarter, buoyed particularly by consumers.
Retail sales have been particularly high in the five months since Brexit, while PMIs across manufacturing, services and construction have also been healthy.
Inflation, projected to next year rise to 2 per cent by the Bank of England, is forecast to take a toll on consumers as weak sterling is passed on in higher prices.
On borrowing, the Office for National Statistics says this will reduce from £68.2bn this year to £59bn next year. It will then fall from £46.5bn in 2018 to £21.8bn in 2019, £20.7bn in 2020 and and £17.2bn in 2021.