UK growth to lag behind rest of EU, says commission

THE UK’S economic growth is set to lag behind other EU countries over the next three years as the eurozone forges ahead at its fastest rate in a decade, according to European Commission forecasts.

UK GDP growth for 2017 was downgraded to 1.5% — from 1.8% in the previous forecast in the spring —with the prediction for 2018 unchanged at 1.3% and a gloomier 1.1% for 2019, when it is due formally to leave the EU.

The commission gave an upbeat assessment of prospects in the eurozone area of 19 countries using the single currency, with growth for 2017 marked up “substantially” to 2.2%, compared with 1.7% in the spring.

The Autumn 2017 Economic Forecast put the UK’s slow growth down to inflation caused by the collapse in the pound following last year’s vote for Brexit.

It also noted that “uncertainty continues to weigh on business investment” and the UK’s GDP performance was expected to “remain subdued over the forecast horizon”.

The EU economy as a whole was forecast to beat expectations with “robust” growth of 2.3% this year, up from 1.9% in the spring forecast, followed by 2.1% in 2018 and 1.9% in 2019.

Only Italy’s economy was in a similarly sluggish state to the UK’s, with a forecast of 1.5% GDP growth this year.

The commission said that its analysis of the UK’s prospects was based on a “purely technical assumption of status quo” in terms of the UK’s relations with the EU, and did not take into account any possible outcome from negotiations on a future trade deal.

European Economic Commissioner Pierre Moscovici said: “After five years of moderate recovery, European growth has now accelerated.

“We had several major elections; they are now behind us and political uncertainty... has continued to decrease from the high levels experienced a year ago.”