Two economists have said that the UK economy is starting to show signs of slowing down, as Brexit starts to have an impact.
AXA Investment Managers senior economist, David Page, said that recent UK output data is pointing to GDP deceleration, with construction and industrial output falling in February. As a result of this and other economic data, Page said that AXA IM continued to forecast quarterly UK GDP of 0.4% for Q1, 2017. “This would be a marked deceleration from the 0.7% expansion recorded in Q4. It would be the weakest outturn since Q1 2016,” Page commented.
Page said that AXA expected to see further deceleration across the course of 2017, with lower consumer spending and an assumption that Brexit uncertainty will weigh on investment spending. Consequently, Page said that slower activity is likely to reduce the chances of tighter monetary policy in the UK. “Our own outlook is for Bank Rate to remain unchanged until 2019. This is likely to contribute to further sterling weakening over the coming months,” Page said.
Separately, Fathom Consulting estimated Q1, 2017 UK GDP growth of 0.4%. It said: “Both survey and non-survey indicators point to a deceleration, suggesting that Brexit is beginning to weigh on the economy. We maintain our call that UK GDP will be significantly below current expectations, with growth of 1.1% in 2017 and 0.4% in 2018.” It added that sterling has further to fall as a result of the economic slowdown. It expected the pound to fall to 1.16 against the US dollar by the end of 2017.