The latest evidence points to GDP growth picking up from 0.4% in Q2 to 0.5% in Q3. That would make it the strongest quarter since the end of 2016. Even so, the economy would still be on track for a poor performance this year overall. Our forecast is for annual growth of 1.3%, the lowest since the financial crisis.
Meanwhile, the Prime Minister promised to end austerity if the UK strikes a “good” deal with the EU. But even on current plans the Government is unlikely to meet its target of eliminating the budget deficit entirely by the mid-2020s. As a result, the Government would have to abandon this target in order to avoid tightening fiscal policy further. In any case, it is still unclear whether the UK and the EU will be able to broker any Brexit deal at all. While there is reportedly some optimism that a deal can be clinched at the EU Council meeting on the 17th /18th October, it seems unlikely that the Northern Ireland issue can be resolved by then.
Become a client to read more
This is premium content that requires an active Capital Economics subscription to view.
Already have an account?
You may already have access to this premium content as part of a paid subscription.
Sign in to read the content in full or get details of how you can access it
Register for free
Sign up for a free account to:
- Unlock additional content
- Register for Capital Economics events
- Receive email updates and economist-curated newsletters
- Request a free trial of our services