Rising real wage growth should pave the way for a consumer recovery next year. At the same time, the lifting of Brexit-related uncertainty will set the stage for a sharp rebound in investment spending. This should allow GDP growth to quicken from a miserly 1.3% in 2018 to about 2% in 2019 and 2020. Note that this is predicated on our assumption of a “soft” Brexit, with a status quo transition period paving the way for a free trade agreement with the EU after this 21-month period. However, the risks are to the downside as the chances of a “no deal” Brexit have risen considerably over the past few months. Indeed, we think there is now an almost 50/50 chance that the UK leaves without a deal, which we estimate could knock off between 1 and 3ppts GDP growth next year, depending on the scenario.
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