The British Chambers of Commerce (BCC) has released its first economic forecast since the EU referendum and has downgraded its expectations of the country’s GDP growth over the next three years.
The organisation, which publishes forecasts every economic quarter, has said it believes Gross Domestic Product – or GDP – to grow just 1.8% in 2016, down from an expected 2.2% prior to the Brexit result.
The BCC also forecasts growth of 1% in 2017 (down from 2.3%) and 1.8% in 2018 (down from 2.4%).
It points to weaker consumer spending and a large fall in investment off the back of the ongoing uncertainty with regards to the UK’s future within the European Union as the main reasons for the fall.
Suren Thiru, BCC Head of Economics, said: “The downgrades to our growth forecast confirm that the UK economy is set to enter a turbulent period, with growth expected to weaken materially in the near term.
“Mounting uncertainty is likely to put a brake on investment, while rising inflation and moderately weaker labour market conditions are expected to stifle consumer spending.”
The forecast predicts that export growth will drop this year before picking back up in 2017/2018 – although it will remain below the rates of growth seen last year until at least 2019.
The BCC also highlights the likelihood that a further cut in interest rates could be made before the end of this year, which could have an impact on future forecasts.
“Although individual businesses continue to report strong trading conditions, the overall picture suggests a sharp slowdown in UK growth lies ahead,” says Dr Adam Marshall, Acting Director General of the British Chambers of Commerce.
“Our forecast suggests that the UK is likely to avoid a recession, but with the health warning that businesses are still digesting the result of June’s EU referendum and the challenges and opportunities to come.
“Stability, clarity and action must continue to be the watchwords for government. Aside from a clear timetable for negotiations with the EU, ministers must act to support business investment and confidence.”