Gloomy growth projections cloud hopes for UK economy

The UK will remain a relative laggard among developed countries this year as the after-effects of the Brexit referendum mean the economy will only enjoy limited benefits from a global upswing in growth, economists said in the FT’s annual survey of the profession.

Forecasts for growth during 2018 clustered around 1.5 per cent as the UK will be pulled in two separate directions next year as uncertainty over the outcome of the Brexit negotiations reduces growth at the same time as an upswing in global activity boosts exports.

Respondents expected investment spending would be muted because businesses would not know what trading arrangements the UK would have with the EU following Brexit, consumers would still struggle with higher import prices and government would only moderately relax austerity.

Howard Davies, a professor at Sciences Po, in Paris, said that the growth figures “will begin with a one”.

“The traded sector should perform relatively well on the back of robust global growth, assisted by a competitive exchange rate, he said. “But I expect consumer spending to slow as real wages continue to be squeezed. That can be seen as positive rebalancing, but the net impact will not feel very good to most individuals.”

But others cited the UK’s poor productivity performance over the past decade as the main reason why growth would lag the Eurozone and the US.

Tej Parikh, senior economist at the Institute of Directors, said that while high inflation “acts as a straitjacket on consumer activity”, “the economy faces the challenge of overturning a decade of lost productivity growth, which is holding down structural growth”.

Many pointed out that other factors could explain part of the UK’s poor performance: the ECB is still using quantitative easing to stimulate growth in the currency bloc while the Bank of England was tightening policy and the Eurozone had emerged from recession later and so has more room to catch up.

A few said the UK would become or continue as the “sick man” of Europe. Those who used this term tended to be more pessimistic than the consensus, mostly because of Brexit.

However, some economists thought this outlook was too gloomy and expected that the fall in the pound following the EU referendum would lead to stronger export growth during 2018.

One respondent, who wished to remain anonymous said: “Given the survey evidence relating to business confidence and export demand there is scope for UK economic activity to present a surprise on the ‘up-side’ and scope for the present data to be revised up in the years ahead.”

How fast do you think the UK economy will grow in 2018 and how will this compare to other countries?

Howard Archer, Chief Economic Adviser, EY ITEM Club

I expect the UK economy to grow 1.4 per cent in 2018, which will be a lacklustre performance compared to other countries. For example, Eurozone GDP growth is likely to be around 2 per cent in 2018

UK growth in 2018 should be helped by the squeeze on consumers easing as the year progresses. However, economic activity is likely to be hampered during much of the year by still significant Brexit uncertainties which will likely have a dampening impact on investment in particular. Domestic political uncertainties may also weigh down on business sentiment and behaviour. Meanwhile, net trade is expected to make a modest positive contribution to growth as the pound remains at a relatively competitive level and global growth is healthy.

Nicholas Barr, Professor of Public Economics, London School of Economics

Growth will be slow — and slower than the rest of the EU

Ray Barrell, Professor, Brunel University London

Growth in the UK is likely to continue to slow, both as compared to the last few years and to the major economies in Europe as well as in North America. We will be likely to see growth around 1.25 per cent for the next two years as neither demand nor trend growth are strong. Short term domestic demand growth will slow as real wages continue to fall and consumers slowly realise they might be worse off after Brexit. Weak house price growth will add to these factors reducing the buoyancy of consumption. Underlying trend growth is affected by weak investment and the impact of gradual separation from production chains in the rest of Europe that have followed from the decision to leave the EU. Some of these effects will be masked by the emerging impact of net export gains that follow from the weakness of sterling.

Marian Bell, Alpha Economics and former member of the MPC

I think it likely UK growth will be below that of other major economies in 2018, at around 1 — 1.5 per cent. Continued austerity and uncertainty about the nature of post-Brexit trade, the recent joint report notwithstanding, will weigh on investment and consumer demand, which will also be hit by squeezed real incomes. Modest nominal GDP growth will likely favour inflation over real growth.

Gianluca Benigno, Reader in Economics, London School of Economics

It could grow around 2% conditional on positive global outlook.

Neil Blake, Head of Global Forecasting, CBRE

1.5 per cent; weaker than other developed economies; still held back by Brexit-related uncertainties and the squeeze on real incomes.

Danny Blanchflower, Professor, Dartmouth, and former member of the MPC

The UK will continue to be the sick man of Europe with GDP growth of around 1 per cent.

Nick Bosanquet, Professor, Imperial College

One per cent. Consumer confidence and spend will be hit by inflation especially in close to household items. Business spend will be hit by increases in living wage, apprenticeship levy, auto enrolment and business rates. Many medium sized companies will face 10 per cent rise in labour costs — this will slow labour market.

EU/US 2-3 per cent with rising demand and falling costs. World GDP 4 per cent. There is a new sick person of Europe.

Francis Breedon, Professor of Economics and Finance, Queen Mary University London

Growth above 2 per cent is possible this year against a benign global background. Brexit, of course, will continue to be a negative influence.

Samuel Brittan, former FT economic commentator

2.5%. Slower than the US. Slightly slower than continental Europe.

George Buckley, Chief UK Economist, Nomura

1.5 per cent year-on-year, among the lowest in the G7 thanks to Brexit. The UK has already slipped down the league tables after having been at or close to the top in the years before the Brexit vote.

Frances Cairncross

Perhaps 1.5 per cent — maybe a little more — probably depending more on what happens in the US (continued fast growth through most of next year) and Europe (ditto, though slowing sooner) than on how the Brexit negotiations progress.

Jagjit Chadha, Director, National Institute of Economic and Social Research

The UK economy will continue to grow below its longer run trend, in increasingly stark comparison to other advanced economies which look to be returning to more robust levels of growth. The basic cause is the reduction in the growth of potential capacity because we are perturbing our exiting trading relations and injecting enduring uncertainty into the economic system. Whilst the competitive level of the exchange rate in conjunction with overseas growth will help the contribution from net trade the prospects for investment and consumption will limit economic growth next year.

Alan Clarke, Head of European Fixed Income Strategy, Scotiabank

We expect UK GDP growth of around 1.5 per cent year-on-year again next year. However, the annual average masks the shorter term growth dynamics. Namely, growth should be on an upwards trajectory throughout the year — at least in percentage quarter-on-quarter terms. In turn, this is likely to reflect the easing of the headwinds facing the consumer (as inflation slows and wages accelerate).

David Cobham, professor of economics, Heriot Watt University

Positively but slowly, 1-2 per cent = less than most other ‘advanced’ economies; mainly the result of years of misguided austerity since 2010 together with the gathering clouds of Brexit, while for example many Euro area countries are finally emerging from equally misguided austerity but without the hit from Brexit.

Lorenzo Codogno, Founder and Chief Economist, LC Macro Advisors Ltd

1.5 per cent: growth will continue below par and below major Eurozone countries, partly as a result of Brexit and partly as a result of pre-existing structural imbalances.

Brian Coulton, Chief economist, Fitch Ratings

1.4 per cent about 1 percentage point weaker than the US and Eurozone This reflects weak consumer outlook given the real wage squeeze and the impact of Brexit uncertainty on capex.

Diane Coyle, Professor of Economics, University of Manchester

Between 0 and 2 per cent — we have to stop giving meaningless point estimates — and more slowly than other G7 economies, for the obvious reason that there seems no end in sight to the policy uncertainty, and hence the likely drip of reduced investment, relocations, and loss of skilled migrant workers.

Bronwyn Curtis, Chairman, JPMorgan Asian Investment Trust

1.3 per cent to 1.5 per cent but much depends on how confident consumers and companies are, and that depends on how the Brexit negotiations are perceived to be going. World growth will be slightly up on 2017, buoyed by the US tax cuts but also more confidence generally, despite the unease over political climate in the the US and several EU countries. The U.K. will have the weakest growth in the G7.

Howard Davies, Professor in Practice, Sciences Po.

The GDP growth figure will begin with a 1. The traded sector should perform relatively well on the back of robust global growth, assisted by a competitive exchange rate. But I expect consumer spending to slow as real wages continue to be squeezed. That can be seen as positive rebalancing, but the net impact will not feel very good to most individuals.

Panicos Demetriades, Professor of Financial Economics, former Governor of Central Bank of Cyprus, University of Leicester

The UK economy will continue to slow down as the private sector adjusts and adapts to prepare for the brave new world post Brexit. Financial institutions and other companies dependent on trade with the EU will continue to reduce their presence. My baseline is around 1 per cent.

The amount of damage to the U.K. economy will, of course, depend on the precise shape and form of Brexit but the uncertainty itself will continue to weigh heavily on prospects. The extent of the slowdown will depend on how ‘hard’ Brexit will be. A soft Brexit or a miraculous reversal — unlikely but not impossible — can prove to be a major boost to the economy. Such a scenario can easily double my baseline growth rate.

Wouter Den Haan, Professor, London School of Economics

Most likely scenario is that the recent experience will continue and that growth of the UK economy will be slow and somewhat less than the European average.

Swati Dhingra, Assistant Professor, LSE

Did not answer.

Mike Dicks, Chief Economist, Wadhwani Asset Management

A bit more quickly than generally expected — perhaps more like 1.75 per cent, rather than the 1.5 per cent consensus expectation. I wish it was because the UK economy proves to be more resilient to Brexit-related uncertainty than generally expected. But the main driver of the surprise, if it materialises, is more likely to be a rather more vibrant global economy than the consensus expects — and particularly on the continent. The euro area, for example, may well expand 2.5 per cent or more next year, rather than the 2.1 per cent generally expected. That should help provide a fillip to exporters and to business confidence — and hence investment. Nevertheless, the UK will probably be bottom of the table, as regards the large developed countries (eg. G7).

Richard Donnell, Research and Insight Director, Hometrack

Did not answer.

Charles Dumas, Chief Economist, TS Lombard

About 1.5 per cent, vs. US and EA both 2-2.5 per cent. The UK needed to rebalance after the 6 per cent-of-GDP current account blowout under George Osborne, and the Brexit vote secured the necessary devaluation, cutting real consumer incomes and thus spending; but Brexit uncertainties are also inhibiting the capex response to the stronger competitiveness and profitability.

Monique Ebell, Associate Research Director, National Institute of Economic and Social Research

If it becomes increasingly clear that the UK is heading for a Canada-style trade deal with the EU, then in 2018 UK economic growth is likely to underperform compared to the rest of the advanced economies, continuing the trend established in 2017. Investment and real wage growth have already stalled, and the uncertainty surrounding the shape of the UK’s future relationship with the EU has made it difficult to capitalise on the weak level of Sterling.

Paul Fisher, Principal, PGFpolicy Ltd

1.5-2.5 per cent, ie middle of the pack for Europe and in line with longer-term trend. Brexit will drag, but rest of Europe wont grow strongly anyway. US will grow a bit faster than Europe as long as Trump doesn't do too much damage. EMEs will of course grow faster than developed.

Noble Francis, Economics Director, Construction Products Association

Our forecast is for GDP growth of only 1.2 per cent in 2018, considerably slower than other major European economies. This is mainly due to the lagged impact of falls in real wages on consumer spending, particularly on big-ticket items, in addition to slower business investment. Day to day business investment has continued but it is the high upfront new investment for a long-term rate of return such as additional factory capacity or contracts for new high-end commercial offices space that are few and far between.

Andrew Goodwin, Lead UK Economist, Oxford Economics

We expect the UK to grow by 1.5 per cent in 2017, placing it above only Italy in the G7 rankings. Though inflation is likely to drop back rapidly, easing the squeeze on consumers, we expect investment to remain sluggish and austerity will remain a drag. And with sterling having strengthened from its post-referendum lows, this will ensure that any boost from net trade is unlikely to do much to offset the domestic headwinds.

Mark Gregory, Chief Economist UK, EY

A couple of points either side of around 1.5 per cent, slower than the major developed economies by around 0.5 per cent. The UK’s outlook is being influenced by Brexit. Any sign that the negotiations are coming off track has the potential to impact the exchange rate and business confidence and hence growth. The consumer is also difficult to read having remained relatively sanguine about the outlook but this may change if things start to be become more difficult.

Rebecca Harding, CEO, Equant Analytics

Economic growth in the UK will be slower in 2018 than in 2017. Expectations have settled at around 1.4 per cent although there is a lot of variation in this depending on assumptions about the impact of Brexit and the likelihood of wage growth and productivity increases. The uncertainty surrounding the UK economy at the moment is likely to flatten investment which, along with sluggish wage and productivity growth, does not suggest that there will be any big surprises to the upside. Growth in Europe will continue to be strong but there are risks in Asia because of China’s debt dependency which could hold growth in the region back. The US economy will remain strong. In the light of all this it is probable that the UK will remain at the bottom of the league for G7 growth.

Rupert Harrison, Portfolio Manager, BlackRock and former chief of staff to George Osborne

My central case for the UK economy in 2018 is growth a little stronger than the current 1.5 per cent run rate. The inflation shock from the post-referendum plunge in sterling has probably already peaked which will take some pressure off consumers, the labour market is OK, investment intentions are ticking up, and I think the global economy will remain a positive tail wind. If — as I expect — we get positive news on a transition deal and the Brexit process isn’t too bumpy then sentiment can improve further.

Jonathan Haskel, Professor of Economics, Imperial College Busines School, Imperial College Busines School, Imperial College London

Following the IMF prediction, around 1.5 per cent, slower than other countries due to investment uncertainty via Brexit.

John Hawksworth, Chief Economist, PwC

We expect the UK to continue to grow only modestly in 2018 at a similar rate (around 1.5%) to that seen in 2017. This reflects the continued drag on real household spending power from elevated inflation levels and the dampening effect of Brexit-related uncertainty on business investment. Other major economies are expected to grow more strongly — over 2% in the US and the Eurozone and over 3% for the world economy as a whole. Stronger global growth will provide some offsetting boost to UK exports, but not enough to prevent another year of relatively sluggish growth.

Dawn Holland, Chief of Global Economic Monitoring Unit, United Nations

The UK is expected to lag behind most of the rest of Europe as well as other developed economies in 2018. According to the UN’s latest forecast, the UK economy will grow by just 1.4 per cent, compared to growth of more than 2 per cent in the United States, Canada, and the European Union as a whole. While globally conditions for investment have started to improve, business investment in the UK seems to be grinding to a halt, which is likely to reflect firm uncertainty related to the business environment post-Brexit. This uncertainty is unlikely to ease significantly in 2018.

Lee Hopley, Chief Economist, EEF, the manufacturers’ organisation

EEF is forecasting GDP growth of 1.3 per cent, which will be slower than anywhere worth comparing the UK to and certainly weaker than the Eurozone and the US. We expect household spending is show only muted increases next year, even as the squeeze on real incomes fades. Small positive contributions likely from business investment (and we mean small) and net trade, but by no means enough to fill to gap left by British consumers.

Ethan Ilzetzki, Lecturer in Economics, London School of Economics

I expect the UK to continue to grow at its currently sluggish rate of below 2 per cent in real terms, which will likely continue to be at the bottom of the league table for comparable economies. I also see a small but not negligible chance of a further slowdown. I see no abating of the current factors for low growth: diminished productivity growth, harm to business confidence due to Brexit, and a consumption slowdown due to inflation (due to the Brexit depreciation of the Pound). There could be a further decline to growth as some more of the details — and negative consequences — of Brexit become apparent in the upcoming year. I also see a possibility of a global slowdown if we see an end to the unusually rapid growth in financial asset prices.

Richard Jeffrey, Chief Economist, Cazenove Capital

A range of economic data suggests that the UK economy is currently growing faster than indicated by Currently published GDP numbers. I estimate the growth in 2017 will have been close to 2 per cent and that a similar rate will be achieved in 2018. However, it may take time for this to be revealed through the normal process of ONS revisions. Within the data, it is noteworthy that net trade is now beginning to make a positive contribution to growth, compensating for a temporarily weaker contribution from household spending. A positive trade contribution in 2017 will have been the fist since 2011.

Dhaval Joshi, Senior Vice President, European Investment Strategy, BCA Research

The UK economy will underperform other major economies in 2018. Experience teaches us that major developed economies tend to perform broadly in line with each other, unless there a domestic-specific shock (either negative or positive). For the UK economy in 2018, the uncertain journey to the eventual Brexit destination can be regarded as a negative domestic-specific shock.

David Kern, Consultant Economist, Kern Consulting, Formerly Chief Economist at the BCC & at NatWest

I expect UK GDP growth to slow slightly in full-year terms, from 1.6 per cent in 2017 to 1.5 per cent in 2018. Weak productivity, heightened political risks, and Brexit uncertainties will be negative influences. But the position will gradually improve after the middle of the year, with growth slowly accelerating in the third and fourth quarters of 2018.

Stephen King, Senior Economic Advisor, HSBC

The UK’s productivity performance has recently been lamentable — even worse than the already-bad numbers recorded elsewhere in the developed world. Some of this predates the Brexit referendum but it is difficult to avoid the conclusion that the UK’s more recent soporific performance — which has sent it tumbling down the global growth league — is associated with the huge uncertainty regarding the UK’s future economic relationship with the EU and, indeed, the rest of the world. Unless there is a sudden moment of credible clarity regarding our post-Brexit arrangements, the conclusion must be that the UK will continue to underperform. On that basis, I expect another year of around 1.5 per cent growth — and even that depends on a favourable global backdrop.

James Knightley, Chief International Economist, ING

1.4 per cent. Only Japan and Italy are expected to post slower growth in 2018. Business surveys suggest there is strong economic momentum globally and this broadening out of the growth story will contrast starkly with the UK where business uncertainty regarding Brexit and the squeeze on spending power will continue.

Ashwin Kumar, Chief Economist, Joseph Rowntree Foundation

The OBR’s relatively pessimistic forecast for GDP growth is most likely to be right. Given the uncertainties about our future trading relationships, which I believe will persist through most of 2018, if not beyond, I expect us to underperform compared to other OECD countries with a more stable economic and political outlook.

Michelle Lam, Senior Economist, TS Lombard

I expect the UK to grow at 1.6 per cent in 2018. That is a tad faster than 2017, but still slower than the euro area and the US. Strong global growth, slower pace of austerity and an end to real income squeeze are reasons why I think growth of the UK economy will hold up next year.

Jonathan Loynes, Chief Economist, Capital Economics

We expect the UK economy to grow by 2 per cent or a bit more in 2018, a slightly faster pace than that seen in 2017. This reflects the likely easing of the squeeze on households’ real incomes as inflation falls back and a pick-up in export growth in lagged response to the pound’s depreciation.

Gerard Lyons, Chief Economic Strategist, Netwealth Investments

I expect the UK economy to grow just under 2 per cent, with a faster pace of growth than in 2017. The fundamentals are improving, the impact of policy on growth may be broadly neutral in 2018, but it is confidence that is the big unknown. If consumer and business confidence recovers during 2018 then that might give a boost to growth. I expect inflation to decelerate and wage growth to accelerate, underpinning consumer spending at a modest pace. Exports should benefit from sterling’s competitiveness and the recovery in world trade. Even if firms put their investment plans on hold, because of Brexit, at some stage they will need to invest, but perhaps that boost will come in future years.

The positive surprise in 2018 — both in the UK and elsewhere — could be a faster improvement in budget finances as nominal GDP grows steadily and borrowing yields remain relatively low.

I was optimistic about the world economy in 2017 and remain upbeat about global growth prospects for the year ahead. Although I still feel we are in a disinflationary environment, and UK inflation will decelerate, a potential risk is higher global inflationary pressures, especially if oil prices firm.

Chris Martin, Prof, University of Bath

By 1.5 per cent, about 1 per cent less than other major economies.

Liz Martins, Senior Economist, HSBC

We think the UK will continue to underperform, growing by 1.5 per cent in 2018 (versus our [developed economy] forecast of 2.1 per and global forecast of 2.9 per cent). For one thing, the UK is further along in its economic cycle than the Eurozone and lacks the stimulus seen in the US (at the margins, both fiscal and monetary policy retain a tightening bias). The indicators have pointed to a distinct loss of confidence among UK consumers of late, as well as a loss of momentum in the housing and labour markets. While manufacturing has been stronger, the all-important service sector has also seen growth slow. So, while we don’t expect a further slowdown in 2018, we don’t expect an acceleration either.

Michael McMahon, Professor of Economics, University of Oxford

I think it will be around 1.5 per cent which will be about the same as 2017 but slower than the US and euro area.

David Meenagh, Lecturer, Cardiff University

UK GDP growth of 2 per cent next year. The latest PMI for manufacturing is strong. There is also strong world growth. I expect this to be a little lower than the US and about the same as Germany.

Costas Milas, Professor of Finance, University of Liverpool

A growth rate in the 1.6 per cent-1.8 per cent range seems appropriate. This will probably be below the average for the Eurozone/EU area. 1.8 per cent could be the most likely option if we were to proceed fast to the next stage of Brexit negotiations. From what I have seen so far, however, I wouldn’t hold my breath . . .

David Miles, Professor of Economics, Imperial College London

Investment has been weak and companies have been holding back on spending. No doubt some of that is Brexit related. If Brexit uncertainty is resolved in a favourable way growth could turn out to stronger than in recent years. There is no guarantee of course that Brexit related caution doers not deepen.

Patrick Minford, Professor of Applied Economics, Cardiff Business School

Around 2 per cent; not much different from other advanced countries. US will be stronger; EU about the same.

Allan Monks, Economist, JPMorgan

We expect growth of 1.7 per cent next year, a small step up from 2017 helped by stronger global growth. With the Euro area starting to fire on all cylinders, this presents the clearest upside risk to UK growth. But the U.K. is still set to continue its underperformance relative to its trading partners, as domestic headwinds related to Brexit peg back growth.

Paul Mortimer-Lee, Chief Economist of North America, BNP Paribas

I expect the economy to expand somewhere in the range of 1.25 per cent to 1.5 per cent. This is broadly in line with the rate of growth of productive potential in the UK — put at 1.3 per cent in 2018 by the OBR. Several other countries in Europe are currently below their potential output in a levels sense and so are growing faster than potential as they attempt to close that gap. The US, at broadly a similar stage in the cycle to the UK, will growth faster than potential, partly due to tax cuts, also. The UK will have a rate of growth below many other developed countries, but in view of its small (if any) output gap and low productive potential growth rate, it would be incorrect to judge it is growing “too slowly”.

Kathrin Muellbronner, Senior Vice President — Sovereign Risk Group, Moody’s Investors Service

Our forecast for 2018 is for the UK economy to just grow by 1 per cent. This is not only a significant deceleration of growth compared to 2017 but it also means that the UK economy will be the only major advanced economy that will experience lower growth in 2018 than in 2017. This is linked to Brexit and the impact it has on consumption and investment, with both demand components weakening in 2018.

Charles Nolan, Professor of Economics, University of Glasgow

The deal signed by Theresa May before Christmas has resolved little and so many of the uncertainties hanging over UK business remain. Coupled with a tight labour market and a weak outlook for productivity, the outlook for growth does not seem especially buoyant. Strong growth in our overseas markets may compensate short-term for these negatives.

Lucy O’Carroll, Chief Economist, Aberdeen Standard Investments

UK activity looks set to disappoint relative to peers once again in 2018. The growth rate itself will be anaemic, likely around 1.5 per cent, and little different from 2017. From a small, open economy like the UK, this is pretty underwhelming. The global economy is gaining further momentum and our major trading partners are growing at an above-trend pace. Yet even with sterling’s increased competitiveness, we do not seem to be feeling much benefit.

Andrew Oswald, Professor, University of Warwick

Probably more slowly than the other main industrialised nations — because of Brexit uncertainties and the fact that the unemployment rate is due to turn up fairly soon.

David Owen, Chief European Financial Economist, Jefferies

UK GDP growth to average 1.2 per cent in 2018 compared to 2.8 per cent for the euro area. A strong cyclical recovery is under way in the euro area which could easily hit 3 per cent if the German corporate sector swings backs into deficit. A cyclical slowdown in the UK may have happened anyway, but we are having to adapt to the new normal, although we fully accept that on a 3-5 year view things may look very different again.

David Page, Senior Economist, US and UK, Axa Investment Managers

We forecast UK economic activity maintaining a similar pace to that recorded for much of 2017 at around 0.3 per cent per quarter, resulting in annual growth of 1.4 per cent. We continue to see pressure on UK consumers with real incomes under consistent pressure, which should begin to ease later in the year (with what we expect to be modest wage increases across the course of 2018, but a more material slowing in inflation in the latter half of the year, to just under 2.5 per cent by close 2018). Offsetting that, we do expect to see a modest acceleration in business investment growth reflecting the relatively early agreement of a 2-3 year transition deal in Brexit negotiations. We expect this to encourage some domestic firms to increase investment spending, in line with the sterling-inspired boost to corporate profits. Solid global growth should also provide a supportive backdrop for net trade, even if Brexit uncertainties prevent UK firms from capitalising on these developments as they perhaps would have done pre-Brexit. Our forecasts see such growth on a par with Italy (1.4 per cent) and faster than Japan (1.0 per cent). However, we expect most other countries we would traditionally draw comparisons with outpacing UK growth in 2018, including US, Germany, France, Spain and Switzerland.

Alpesh Paleja, Principal Economist, CBI

We expect the UK to grow at a fairly subdued 1.5 per cent in 2018 (following similar growth in 2017). We expect domestic demand to be pretty soft, but forecast more of an underpin from net trade, boosted by both the lower pound and firm global growth. However, we expect only Italy to grow at a slower pace than the UK next year (at 1.2 per cent).

Tej Parikh, Senior Economist, Institute of Directors

The UK’s economic growth rate will underperform relative to other developed economies — at roughly a modest 1.5 per cent. That’s largely because, irrespective of Brexit, the economy faces unique immediate and underlying weaknesses. Firstly, inflation — currently the highest in the G7 — is squeezing households while wage growth is also subdued. This acts as a straitjacket on consumer activity, a key determinant of short-term growth. And, secondly, the economy faces the challenge of overturning a decade of lost productivity growth, which is holding down structural growth.

Joseph Pearlman, Professor of Macroeconomics, City, University of London

I would think that growth would still be below trend prior to 2008, so about 1.5 per cent. The main reason for this pessimism is because of what I anticipate will be continued uncertainty about Brexit. I also suspect that Brexit uncertainty will still have its effect on the EU, so am not convinced that there will be much difference in growth rates between the EU and the UK.

Ann Pettifor, Director, Policy Research in Macroeconomics (PRIME)

The end of 2017 witnessed, in our view, the top of the global asset bubble. Rupert Murdoch’s decision to dispose of 21st Century Fox was a clear indication that the bubble had peaked. Bitcoin’s stratospheric rise is just one of the many asset bubbles that may well implode in 2018. The decision by the ECB to begin ‘tapering’ and the global tightening triggered by the Fed, spells instability and volatility for the heavily indebted global economy. At the same time we are in a global cyclical upturn which is frothy. This means the UK may do a little better than many have forecast, but still below most G7 countries, due mainly to uncertainty surrounding Brexit. We think UK GDP may rise in 2018 by around 1.7 — 1.8 per cent, (as against OBR’s 1.4 per cent) but compared to over 2 per cent for the US and Eurozone. Our ‘prediction’ could be downwardly affected (a) by a renewed Brexit crisis, or (b) if the peaking of the bubble, and global tightening means the global upturn fizzles out even earlier than we expect.

John Philpott, Director, The Jobs Economist

The depressing effect of Brexit uncertainty on business investment will outweigh the benefits of a weak currency and buoyant world trade on net exports, while stagnant real household incomes will curb consumer spending. UK GDP will at best grow by a relatively slow 1.3 per cent. Both the Eurozone and the US, without such self-inflicted policy wounds, will easily outpace us.

Kallum Pickering, Senior UK economist, Berenberg Bank

I expect real GDP growth to accelerate a little to 1.8 per cent in 2018, that is, broadly in line with the UK’s potential rate outside of the EU — based on an EU trade deal covering most goods and some services. With the UK and the EU settling the divorce part of the Brexit negotiations, especially the highly contentious Brexit bill, the risk of a no-deal hard Brexit has fallen (to 20 per cent from 30 per cent previously). Lower, but still elevated, Brexit uncertainty can enable demand growth to pick-up a little, especially long-lived investments. Compared to other major advanced nations the UK is likely to under-perform. Having enjoyed one of the strongest post-Lehman recoveries the UK should be riding high along with other advanced nations as the global upswing gains momentum. While other countries at a similar stage in the economic cycle — like the US and Germany — are likely to enjoy above-trend growth next year, the UK is set to barely manage its trend rate as uncertainty dampens demand.

Christopher Pissarides, Regius Professor of Economics, London School of Economcis

Around 1 per cent, below other countries. Reasons are related to uncertainty about Brexit, the government not doing a good job overall (too many scandals, policy reversals and indecision) and other countries offering better investment opportunities for multinationals.

Ian Plenderleith, Chairman, Sanlam UK [MPC member, 1997-2002]

1- 1.5 per cent, significantly slower than other developed economies. Reason: continuing gradual dampening effect of leaving EU.

Jonathan Portes, Professor of Economics and Public Policy, King's College London

The UK economy has slowed considerably with respect to other countries, and I would expect this period of relatively sluggish growth to continue. Brexit-related uncertainty will persist, which will reduce business and perhaps consumer confidence. Meanwhile, the labour market will slow, and net migration will continue to fall, reducing labour supply and hence potential growth. However, if world growth continues to be relatively strong, this will help UK exports and manufacturing, and the impact of the sharp fall in the exchange rate post-Brexit will dissipate.

Richard Portes, Professor of Economics, London Business School

GDP 1.0 per cent year-on-year, with downside risk. Household savings already at very low levels, consumer indebtedness already at very high levels; investment will continue to suffer from Brexit-induced uncertainty; no further stimulus from 2016 exchange-rate depreciation. The only plus for UK is relatively strong growth in EU27 and US. But we shall again be the slowest-growing G7 country.

Vicky Pryce, Former joint head of the UK Government Economic Service

1.5 per cent which will again probably be the slowest in the G7 and quite probably also in the EU where even Italy will overtake the UK in 2018. And even that growth will be possible mainly because of a sustained pick up in world trade seen through 2017 and carrying on in 2018 after weak growth in 2015 and 2016 and a strong recovery in Europe where most of UK trade goes. Nevertheless both consumer spending and investment will remain subdued reflecting the weak growth in disposable incomes and the economic and political uncertainty surrounding the transition phase and the final Brexit deal that might emerge. The negotiating process which has resulted in an agreement on Phase one of the UK’s exit from the EU that allows in principle trade talks to begin has exposed the weakness in the Uk’s hand in striking any deal. Because of the difficulty of delivering what was promised by the Leave campaign this will ensure that the Brexit issue will continue to dominate British politics for years to come and destabilise business decisions.

Sonali Punhani, Vice President, European Economics Research, Credit Suisse

We expect the UK to grow at 1.8 per cent in 2018, up from 1.5 in 2017, and lower than Euro area growth of 2.6 per cent and US growth of 2.7 per cent. However our forecast is higher than consensus because we expect the manufacturing sector to benefit from robust European and global growth, uncertainty to reduce once the transition deal gets finalised soon and consumer spending to recover as headwind from inflation fades.

Ricardo Reis, Phillips Professor of Economics, London School of Economics

Between 1 and 2 per cent real per capita. More likely than not, the UK will grow less than the EU average.

David Riley, Head of Credit Strategy, BlueBay Asset Management

I think the UK will meaningfully under-perform other major economies in 2018 with growth little above 1 per cent on the back of weaker consumption and investment spending. The UK typically benefits in a global environment of rising growth and buoyant international trade and markets, but uncertainty associated with Brexit will continue to weigh on UK growth and sterling.

Philip Rush, Founder and Chief Economist, Heteronomics

I expect growth to sustain at 0.4-0.5 per cent quarter-on-quarter through 2018 (1.8 per cent year-on-year on average) as inflation eases its squeeze on real incomes and the global expansion persists. Rate hikes are unlikely to make much of a dent in demand next year.

Yael Selfin, Chief Economist, KPMG

Next year is expected to see UK’s continued decoupling from the overall positive trend for the world economy. Higher inflation, Brexit-related uncertainty and poor productivity performance have all taken their toll on the UK economy, with growth likely to remain modest at 1.5 per cent in 2018.

Andrew Sentance, Senior Economic Adviser, PwC

UK economic growth is likely to be around 1.5 per cent in 2018. We are likely to be at the bottom of the G7 growth league and the bottom of the league table of major EU economies. At a time when the world economy is growing well, the UK is stuck in the slow lane, mainly due to Brexit.

Philip Shaw, Chief Economist, Investec

We consider that the UK economy is past the worst of the slowdown and should record a modestly firmer pace of expansion in 2018. An expansionary Budget, 4 per cent global GDP growth and a less intense consumer squeeze should all add support. But we are still talking about relatively slow growth, not just in terms of a comparison with the 2013-2016 period but also with the current performance of other mature economies. It is perhaps unfair to compare the UK’s prospects with the Euro area, whose recovery is less mature and where there is a tangible output gap. But the British expansion is also likely to lag that of the US whose unemployment rate is similar to ours. Here of course productivity is critical and has developed from a ‘puzzle’ into a critical policy issue.

Andrew Simms, Co-director New Weather Institute, University of Sussex

The question implies that the UK’s rate of GDP growth is an effective shorthand for the wider success of the economy. In fact it measures only the quantity, not quality of economic activity. GDP excludes many social and environmental costs, and includes defensive expenditures on things such as poor health, crime and pollution, which are not measures of success. That this remains our principal, default economic indicator belies decades of critique about its unhelpfulness and powers of misdirection. At the global aggregate level the economy has already breached several key environmental thresholds, such as with climate change. That means that a burden of proof to demonstrate the viability of further GDP growth, particularly for the economies of wealthy OECD countries, rests on its advocates. If growth is to be pursued, then the key questions are, according to a recently published set of Theses for the reform of economics, ‘growth of what, why, for whom, for how long, and how much is enough?’ It may seem esoteric to some, especially with the pressing distractions of Brexit, but looking back a decade or more hence from now, I believe the most important question for us to answer will be judged to have been: what rate of growth, at what rate of decarbonisation, is compatible with the UK’s role in meeting the targets of the Paris Climate Accord? That said, the UK economy probably will see low to moderate growth. It will benefit from the sigh of relief that business has breathed at the prospect of Britain staying in the Customs Union and the Single Market for the transition period, and possibly beyond. It will however be hampered in comparison to the rate of the rest of Europe, partly because all the focus of the business, enterprise and trade departments will be on Brexit, rather than looking, for instance, at the urgent development of our modern, low carbon industry and enterprise, or at the training of young people for the tomorrow’s green collar economy and the development of resilient and vibrant, small and independent, local and regional enterprises.

Nina Skero, Head of Macroeconomics, CEBR

We expect UK economic growth in 2018 to stand below the 2017 level. While the slowdown will be marginal this would still make 2018 growth the lowest since 2009. Growth will also be slower than in other developed economies such as the US and Eurozone.

Andrew Smith, Chief Economic Adviser, Industry Forum

The world (ex UK) is enjoying a synchronised — and hence to an extent self-fuelling — upswing. Policy in the EU, particularly, has become more expansionary. Momentum is still building and global growth should accelerate from 3 per cent this year to 3.5 per cent in 2018.

In contrast, the UK is growing at around half this rate. Fiscal policy remains tight and real earnings growth will be at best sluggish after this year’s squeeze. With Brexit uncertainty set to increase, the contributions of fixed investment and net trade to growth are unlikely to improve much in 2018 leaving overall growth stuck around 1.5 per cent — if we are lucky.

Don Smith, Chief Investment Officer, Brown Shipley

It is impossible to quantify the degree to which Brexit uncertainties are acting as a drag on UK economic growth but very likely this effect goes some considerable way to explaining why the UK is lagging the current upswing in global economic growth. Looking into 2018, the clouds that currently hang heavy over the outlook for the UK economy may begin to part in the second half of the year as more clarity emerges on the shape of the UK’s post-Brexit trade agreement with the EU. Lower inflation should also lend support through its effect in improving consumers’ spending power. 2018 could well be a year of two halves for the UK economy:- sluggish first half but improving in the second half. Annual GDP growth could recover back towards 2 per cent but this still means that the UK will continue to lag both the US and Eurozone.

Andrew Smithers, Retired, Founder and former Chairman of Smithers & Co

Slowly — lack of past investment dating back to well before 2008 means that productivity will remain poor.

Gary Styles, Director and Economist, GPS Economics

Our central forecast with all the usual caveats predicts growth of around 1 per cent in 2018. This is likely to represent one of the slowest rates of growth for a major economy in 2018. UK productivity growth is a considerable worry even when compared to global productivity concerns. UK political fighting might look attractive to some politicians but the real costs to the economy in terms of postponed investment and over stretched consumers are a high price to pay.

Paolo Surico, Professor of Economics, London Business School

Possibly slower than the rest of the EU, driven by low investment and anaemic consumption growth coming from enduring political uncertainty and the squeeze on real wages.

Suren Thiru, Head of Economics, British Chambers of Commerce

2018 is likely to be a tougher year for the UK economy with growth to slow further to 1.1 per cent in the year. This is likely to be in marked contrast to the more upbeat growth outlook in most of the other advanced economies.

Household consumption in the UK is likely to remain stifled by falling real wages. Business investment is likely to remain sluggish weighed down by Brexit uncertainty and the cost of doing business in the UK.

Despite the drop in the value of sterling since the EU referendum, the contribution of net trade to UK GDP growth is likely to not be as strong many are predicting. The depreciation of the pound has been something of a ‘double edged sword’ as many firms who export also import. While the outlook for UK exporters is for modest growth, import growth is likely to remain solid, with little evidence that consumers or firms are switching away from imports towards domestic alternatives despite their rising cost.

Phil Thornton, Director, Clarity Economics

I think the economy will slow in 2018 as the uncertainty created by the stop-start Brexit negotiations nags at consumer and business confidence and at investment intentions. A drop to 1.5 per cent from 1.8 per cent in 2017 seems likely. The interesting comparison is with the eurozone, which could post growth as high as 2.4 per cent. Those data will be confirmed in spring just as the UK will leave the EU — a timely reminder of the damage that the UK is doing to itself by leaving.

Samuel Tombs, Chief UK Economist, Pantheon Macroeconomics

The economy will not spring back to life in 2018 just because the risk of a hard Brexit has retreated to the middle distance, following the breakthrough in exit negotiations. Meagre increases in real wages and employment, moderately higher interest rates, the precarious housing market and further austerity measures will weigh on growth in consumption. Both investment and net trade likely will put in a better performance in 2018, but only by enough to offset the slowdown in consumption growth. As a result, we expect GDP to grow by just 1.5 per cent in 2018, the same as in 2017 and the slowest rate among advanced economies, bar Italy and Japan.

John Van Reenen, Gordon Y. Billard Professor of Management and Economics, MIT Department of Economics and Sloan

UK GDP growth at 1.8 per cent (1.5 per cent to 2 per cent). The drag down from the uncertainty of Brexit offset by continued good growth in US and rest of EU.

Daniel Vernazza, Chief UK & Senior Global Economist, UniCredit Bank

The UK economy is likely to slow further in 2018 and remain at the bottom of the G7 growth table. While firmer global growth is supporting the UK economy, its relative growth prospects are weak as Brexit-related uncertainty and the prospect of a less open economy weigh on economic activity. Since a “withdrawal agreement” and a binding transition agreement with the EU are unlikely to be concluded until early 2019, and with the date of the UK’s withdrawal (29 March 2019) coming into sharper focus, firms will act on their contingency plans and business investment will fall next year. In other words, Brexit-related uncertainty is likely to weigh more heavily on the UK economy in 2018 than in 2017.

Keith Wade, Group Chief Economist, Schroders

1.6 per cent well behind the US, Eurozone and probably Japan. Uncertainty over Brexit is holding back capex (which is strong elsewhere).

Ross Walker, Head of UK & European Economics, NatWest Markets

We forecast UK GDP growth of 1.3 per cent in 2018 . . . slower than most other advanced economies (eg, Euro Area 2.0 per cent, US 2.7 per cent). We envisage broad-based sub-trend growth across the demand components: UK household consumption is forecast to stage only a modest recovery in real-terms as the year progresses and inflation drifts back to target. Wage inflation is likely to remain anaemic and household balance sheets under pressure. Debt-servicing costs will edge up (albeit from historically low levels) as the BoE nudges Bank Rate a little higher (to 1.0 per cent by end-2018). The UK has not participated fully in the global capex recovery — presumably this is largely a consequence of Brexit-related uncertainties, which we expect to persist in 2018. The fiscal policy stance continues to be one of moderate tightening, despite some dilution in the November Budget. We expect only a modest boost to GDP from net exports in 2018 (0.3 percentage points), recent experience cautions against expecting any ‘export-led recovery’.

Peter Warburton, Director, Economic Perspectives Ltd

We expect economic growth of around 1.3 per cent in 2018, mainly due to a stagnation of household consumption. The main risk to the upside in our forecast is that businesses carry out deferred expenditures as they receive clarity on the UK’s future trading arrangements with EU earlier than expected. Private non-financial corporations have amassed considerable short-term assets which could be readily deployed. The main risk to the downside in our forecast is that inflation surges higher in 2018, exerting greater pressure on household finances and spending at a time when credit conditions are also tightening. Most other G7 countries will enter 2018 with stronger economic momentum than the UK. EU27, especially Germany, has been a beneficiary of increased absorption of goods into China. However, we think that synchronised global growth will be spiked soon by a surge in real long-term interest rates, which will trigger a credit default cycle and violent spread-widening. Hence we expect global growth to weaken during 2018 and the UK’s adverse growth differential should lessen by year end.

Martin Weale, Professor of Economics, King's College London and former member of the MPC

My forecast is that Britain’s economy will grow at 1.2 per cent in 2018. The main influence is not so much weak demand growth but rather a weak supply side. With limited productivity growth, output growth is constrained by growth in labour input. The most recent data show hours as having grown by 1.4 per cent per annum. It is hard to believe that such a growth rate can easily be sustained with low levels of unemployment and a falling rate of immigration. Countries like France with a high level of unemployment are in a much better position to grow rapidly, and of course productivity growth is faster in the leading-edge economies of continental Europe despite their levels of productivity being much higher than ours. Without Brexit we would possibly have had a period of higher demand growth before inflation would have picked up but, unless productivity performance were also better or immigration even higher, it is hard to see the higher output as being sustainable. While it is hard to understand the logic of leaving the EU in order to become an economic powerhouse like Germany, it is disingenuous to describe the weak prospects for next year as a consequence of the Brexit vote; they are better seen as a consequence of full employment and very weak productivity prospects.

Simon Wells, Chief European Economist, HSBC

It’s hard to see where an acceleration can come from. Consumers are squeezed, businesses still face considerable uncertainty, the public government’s fiscal targets don’t allow a meaningful rise in government spending and exporters seem to be using the fall in the pound to build margins rather than sales volumes. We expect the UK will maintain the same pace of growth in 2018 at 1.5 per cent.

Matt Whittaker, Chief Economist, Resolution Foundation

With Brexit getting ever-nearer, uncertainty is set to prove the key watchword of 2018. While global growth is likely to retain its recent momentum, the UK is therefore likely to enter something of a holding pattern.

With net migration continuing to fall, the slowdown in overall GDP growth is likely to prove more marked than the one in GDP per capita, but both metrics are likely to disappoint relative to trends elsewhere in Europe.

Michael Wickens, Professor of Economics, University of York (Emeritus) and Cardiff Business School.

1.6 per cent. The uncertainties surrounding Brexit have held back the economy, especially business investment. The depreciation of sterling following Brexit and low UK interest rates has not acted as a boost to output; it has mainly affected the rate of inflation. The euro economy is at last coming out of its torpor and is beginning to grow faster than the UK.

Trevor Williams, Professor, Derby university, TW consultancy

1.3 per cent. This will be one of the slowest growing of the major industrialised economies owing to weak productivity and a slowdown in employment growth. Growth of those in employment is no longer sufficient — or possible — as the economy reaches full employment.

Alastair Winter, Chief Economist, Daniel Stewart & Company

1.9 per cent. I think businesses will cheer up as the global economy keeps moving ahead and it becomes increasingly likely that the UK will stay in the Single Market (controversial as that seems right now). Consumer confidence and Consumption should pick up too from the summer.

Tony Yates, Consultant/blogger

I would guess about 1-1.5 per cent growth. I’d expect this to be substantially less than the Eurozone, which seems to be responding well to the global recovery and to its own stimulatory monetary policy; and also less than in the US, whose already healthy growth will be boosted somewhat, temporarily, by the Trump tax cuts. In the UK, uncertainties about the precise course of Brexit, and the reality of the hit to living standards manifest in the fall in Sterling, high inflation and weak nominal wage growth, are going to continue to weigh on spending and growth.

Garry Young, Director of Macroeconomic Modelling and Forecasting, NIESR

The NIESR central case is that GDP will grow by 1.7 per cent in 2018, pretty much the same pace as this year and last. This is a bit weaker than in the OECD countries as a whole, where growth is expected to average 2.1 per cent in 2018. There is a lot of uncertainty about growth in the major economies. Partly this reflects well-advertised uncertainty around productivity which has disappointed in many economies in recent years. And Brexit uncertainty is layered on top of this in the UK and other closely connected economies, such as Ireland and the Netherlands. While uncertainty is likely to continue to hold back UK investment, demand for UK goods and services are likely to be supported by net exports driven by a competitive sterling exchange rate.

Linda Yueh, Adjunct Professor of Economics, London Business School

The British economy is likely to grow slightly slower than some other major economies due to slow productivity growth impeding wage growth. Until inflation due to Sterling depreciation passes through, wage growth will also be affected by higher prices. So, comparatively against the euro area and USA which are on more of a cyclical upswing, UK growth may be a tad slower in at least the first part of 2018.

Anonymous

1-1.5 per cent about 1 per cent less than US and Eurozone as we move towards a Canada deal on Brexit which will depress investment and consumption.

Anonymous

1.25 per cent, less than other advanced economies. Real incomes and consumption will be constrained by inflation, and investment constrained by uncertainty.

Anonymous

2.0 per cent — slower than US, about the same as EU, close to or perhaps above UK’s long term sustainable rate.

Anonymous

Evidence is gathering that the fall in sterling in June 2016 is feeding into higher export demand. A buoyant global economy is a major boost, including a long awaited cyclical upswing in the eurozone. Lower inflation through 2018 will also support modest growth in consumer spending as the constraint on real incomes is reduced: towards the end of the year real incomes are likely to be rising modestly. We see UK GDP growth of 1.7 per cent next year, similar to the rate in the eurozone. The UK and eurozone are at different stages in their respective economic cycles following the Great Recession. The UK has enjoyed a long period of recovery and exhibited a pace of economic expansion at or slightly faster than its trend rate of growth and is now in the mature phase of a lengthy period of growth. In contrast the eurozone, as a whole, is now enjoying a period of expansion after a lengthy period of stagnation following the Great Recession. US growth is likely to be around 2.5 per cent next year and is the advanced economy that has made most consistent progress since the Great Recession. Given the survey evidence relating to business confidence and export demand there is scope for UK economic activity present a surprise on the ‘up-side’ and scope for the present data to be revised up in the years ahead. Indeed the National Accounts published on 22 December revised up GDP growth in 2016 to 1.9 per cent from 1.8 per cent previously. Further upward revisions to recent economic growth in coming months are likely.

Anonymous

1.6 per cent slower than Europe, which is still experiencing a boost from QE while the UK has started to tighten and will continue given inflation at 3.1 per cent.

Anonymous

1.4 per cent slower than most developed economies (eurozone circa 2 per cent; US 2.5 per cent).