Frances Ball 29 Apr 2019 10:37am

EY economists cut UK growth projections

In the face of continued uncertainy over Brexit, EY’s ITEM Club has cut back its 2019/2020 forecast for GDP growth

The economists, who use the Treasury’s economic model, previously estimated growth of 1.5%. In their latest forecast, they revised that figure down to 1.3%.

“At risk of sounding like a broken record,” EY’s chief economist Mark Gregory wrote in the forecast report, “the outlook for the UK economy remains incredibly difficult to forecast.

“The disappointing level of business investment seems likely to be due to the lack of clarity on the future UK-EU relationship but, by contrast, some of the growth in UK GDP in the first three months of 2019 may be due to business and consumer stockpiling as a precaution against a no-deal Brexit,” he added.

Although growth of 0.4% in the first quarter was an improvement on the end of 2018, EY warned that this was likely to overstate the economy’s overall strength.

It also reduced its estimate for growth in 2020 back to 1.5% from 1.7%, as poor growth in 2019 would be likely to have a “dampening” effect on the following year.

EY’s ITEM Club expects consumer spending to grow by 1.4% in 2019 and 1.7% in 2020, while earnings growth is projected to be 3.2% in both years.