Jessica Fino 19 Dec 2017 12:51pm

UK growth to lag behind global economy in 2018

The global economy is expected to grow at its fastest rate since 2011, but uncertainty related to Brexit is expected to drag on UK growth, according to PwC

The Big Four firm's Global Economy Watch predicted the global GDP growth of almost 4% in 2018, adding an extra $5trn (£3.7trn). The main drivers will be the US, emerging Asia and the Eurozone, which will contribute a combined 70% of economic growth next year.

However, the UK’s GDP growth will drag, with PwC expecting it will grow only by 1.4%. This is compared to 3.7% of growth globally in terms of purchasing power parity, 2% amongst the G7 countries, 2.4% in the US and 6.5% in China.

UK inflation is also expected to be 2.7%, higher than among the G7 countries at 1.8% and in China at 2.3%. Global inflation is set to reach 2.9%.

Eurozone countries will grow between 2% and 2.5%, marking it the fifth consecutive year that these economies outpace the core.

The Netherlands is expected to lead the core economies’ growth at 2.5%, while Ireland is set to be the fastest growing peripheral economy with a growth rate at 3.5%.

Barret Kupelian, senior economist at PwC, said, “We expect global economic growth to be broadly based in 2018, rather than dependent on a few star performers.

“While the growth outlook for 2018 is positive, there are some downside risks for business to bear in mind, including the progress of the Brexit negotiations and wider discussions about the future of the EU.”

The Big Four firm said it expects monetary policy to tighten in the G7, reflecting closing output gaps in some advanced economies and stable inflation expectations.

Moreover, the aggregate G7 unemployment rate is on course to hit a rate below 5%, the lowest rate in 40 years. But wage growth will remain below pre-crisis trends, driven by tight labour markets specially in the US.