We still take a pounding
Even a Brexit deal won’t lift wages
EVEN a ’smooth Brexit’ will fail to lift wages above their pre-recession levels in real terms, the CBI has warned.
In its latest economic forecast the business group said an orderly Brexit when the UK leaves the EU in March would spark steady economic growth over the next two years.
There would be a gradual improvement in quarterly household spending growth of 1.4% in 2018, 0.8% in 2019 and 1.4% in 2020 as real earnings “start to show more signs of life”.
However, Britain would continue to be held back by weak productivity, the CBI said.
As a result, the CBI forecasts that both real wage and household spending growth will stay below their pre-crisis levels.
Based on the Government’s Withdrawal Agreement passing through Parliament, the CBI predicts GDP growth of 1.3% for 2018, 1.4% in 2019 and 1.6% during 2020.
Business investment growth would pick up modestly from a poor 2018 as Brexit uncertainty lifts and the impact of spending on automation becomes more prominent. The CBI added that exports would be supported by firm global growth at a rate of 1.4% in 2018, 3.0% in 2019 and 3.1% in 2020. However, a corresponding revival in import growth would mean that “support from net trade fizzles out over our forecast”.
Carolyn Fairbairn, CBI director general, said: “An orderly Brexit next year would see the UK enjoy steady economic growth for the next couple of years.
“But as the range of recent impact studies show, a no-deal scenario would blow these figures out of the water, severely hurting businesses, jobs and living standards.
“The Government’s deal is not perfect. But it is the only offer on the table that can protect our economy, reduce uncertainty and open up a route to a decent trade deal in the future.” The FTSE 100 fell 1.44% on Brexit and global trade fears.