Few upsides for economy in 2019, says KPMG

THE coming year is likely to be “one of the most eventful in Britain’s recent history” with limited upside expected for the UK economy, according to a report issued by accountancy giant KPMG.

In its latest quarterly Economic Outlook Report, the company said that as the UK is “finally seeing a narrowing of the different directions Brexit could take” businesses can make “more targeted contingency plans” than they have been able to up to now.

However, while it predicted the UK economy could grow by 1.6 per cent in 2019 and 1.5% in 2020 if Prime Minister Theresa May’s withdrawal agreement is secured, it said that if a no-deal scenario cannot be avoided GDP growth could fall to at least 0.6% in 2019 and 0.4% in the following year “due to temporary disruptions to supply chains and trade”.

KPMG chief economist Yael Selfin said: “Looking ahead to 2019, we are bracing ourselves for one of the most eventful years in Britain’s recent history.

“However, while Brexit is likely to dominate a large part of next year’s agenda, it is important we don’t let it cloud our vision to other opportunities and risks around us.

“While tightening credit conditions globally and continued geopolitical tensions are also sure to produce some hairy moments in 2019, capitalising on new markets and products would help the UK economy to grow.”

Despite noting that greater clarity around Brexit would ease constraints on businesses willingness to invest, the report said the UK’S exit from the EU was not the only factor leading to weaker investment in the current year, with rising interest rates and global supply chain risks also playing a part.

“The UK’S economic challenges go beyond Brexit, and more focus should be turned towards improving productivity and social inclusion as finding solutions for these two problems will go a long way to improving the UK’S long-term prospects,” Ms Selfin said.