British economy facing Brexit-induced struggle
LONDON: Britain’s economy will face sluggish growth in the coming years on the back of Brexit fallout, finance minister Philip Hammond revealed in a key budget update.
Gross domestic product (GDP) is projected to grow 1.5 per cent this year, Chancellor of the Exchequer Hammond said, hiking prior guidance of 1.4 per cent thanks to increasing productivity and the strong world economy.
The new 2018 forecast remains a slowdown, however, compared with 1.7-per cent expansion last year, and followed a gloomy OECD warning that Brexit would crimp growth over the next few years.
And in a new twist, the Office for Budget Responsibility (OBR) fiscal watchdog announced that Britain’s so- called ‘Brexit bill’ – or the final divorce settlement that London will pay Brussels to sever ties with the European Union in a year’s time – was estimated at £ 37.1 billion (42 billion euros, US$ 52 billion).
This is in line with a Treasury estimate given last year of between 35 billion pound and 39 billion pound. The OBR also projected that Britain would continue to pay the divorce bill until the year 2064, although the bulk would be paid over the next five years.
Britons voted in a shock referendum in 2016 to leave the European Union, despite warnings from some quarters that it would negatively impact growth.
“The vote to leave the European Union appears to have slowed the economy, but by less than we expected immediately after the referendum,” the OBR said in a statement published alongside the budget update.
The economy was proving resilient “thanks in part to the willingness of consumers to maintain spending by reducing their saving”, it added.
Separately on Tuesday, the Organisation for Economic Cooperation and Development ( OECD) forecast that Britain would miss out on buoyant global economic growth over the next two years.
The OECD edged up its 2018 Britain forecast by a tenth of a percentage point to 1.3 per cent, but froze its 2019 guidance at 1.1 per cent expansion.
It blamed high inflation dampening consumer demand and continued uncertainty about Brexit. — AFP