UBS upgrades forecast for UK economic growth to 1.1pc next year

‘The UK is feeling the benfits of a lively export environment with strong global growth’

SWISS bank UBS has admitted that the UK’S economic outlook is not as bad as it has been thought due to concern over Brexit, saying it is well-positioned to benefit from strong global growth.

The UBS forecast that the economy will grow 0.7pc in 2018 has been upgraded to 1.1pc, and believes this rate of acceleration will be sustained into 2019.

This is still a fairly negative view compared to the consensus view that the economy will grow by 1.4pc next year. The Bank of England thinks 1.6pc.

Dean Turner, an economist at UBS, told The Daily Telegraph that this shift was based on a prediction that wages will pick up in the new year, even if business investment remains sluggish.

The UK is a “small open economy” Mr Turner said, and is feeling the benefits of a lively export environment with strong global growth.

As a result, he explained, exports as a contribution to GDP should grow in 2018, outstripping a slight slowing of imports. However, he echoed earlier comments about Brexit in saying the lead-up to March 2018 will prove crucial for business investment decisions.

He said: “If companies were to accelerate their contingency plans early next year, that would be concerning.”