Growth forecasts for the UK economy have been revised sharply downwards following the Brexit vote on June 23rd, with some predicting a recession either late in 2016 or in 2017.
AXA Investment Managers senior economist, David Page, said the manager’s UK GDP forecast for 2017 has been cut from 1.9% to 0.4%. He added: “The UK economic outlook is likely to be severely affected by the decision to leave the EU. The economy looks to have sagged under the uncertainty of the referendum itself, with deferral of activity. The decision to leave the EU looks likely to make much of this deferral permanent.” Eric Chaney and Laurence Boone, of AXA IM Research and Investment Strategy, also sounded a pessimistic note on the UK’s outlook after the EU referendum: “Leaving the European Union will certainly have negative consequences for the UK economy, in the short and medium terms. While the depreciation of the pound may give some relief to exporters’ margins, the combined confidence and inflation factors will hit real domestic demand even harder: consumers’ real income will be hit and corporate investment plans are likely to be postponed until the negotiation dust settles. Going forward, we expect a significant slowdown in the UK, starting to materialise in Q3 or Q4, a recession being a possibility.”