UK growth is downgraded amid gloom in wake of Brexit

new economic relationship with the EU and the extent of the increase in barriers to trade, migration, and crossborder financial activity,” the report explained.

The United States also suffered a cut to growth projections this summer, but received an upgrade in the October report that nullified the move. The US economy is now expected to grow 2.2 per cent this year and 2.3 per cent in 2018.

Meanwhile figures from the Office for National Statistics (ONS) showed that Britain’s trade deficit in goods rose by £1.4 billion to £14.2bn as the countryimportedmorechemicals, machinery and textiles.

In the three months to August, exports fell 2.7 per cent while imports rose 3.9 per cent.

It had been thought that British exporters would be able to benefit from the fall in the value of the pound, which makes UK goods cheaper for overseas buyers, but any real benefit has yet to materialise.

The ONS figures also show that Britain’s import of goods from the EU hit a record high in September.

The UK imported over £22bn worth of goods from the EU in August, but only exported £14bn, driving home the importance of a trade deal as the clock ticks towards Brexit in March 2019.

Oliver Kolodseike, senior economist at the Centre for Economics and Business Research, said: “The ONS figures highlight how dependent the UK is on trading with the EU.

“These figures indicate how important it is for the UK to make progress with Brexit negotiations as leaving the EU without a deal could have far-reaching negative consequences for exporters.”

In its Forecast Evaluation Report, the OBR said the productivity downgrade is expected to hit growth and weaken the public finances outlook.

The OBR warned: “The continued disappointing outturns, together with the likelihood that heightened uncertainty will continue to weigh on investment, means that we anticipate significantly reducing our assumption for potential productivity growth over the next five years.”