Trade deals ‘key to UK economic growth’
Growth in the UK economy will hinge on the outcome of Brexit and global trade tensions, according to the CBI.
Gross domestic product growth is set to remain modest at 1.3 per cent this year and 1.2 per cent in 2020, the CBI’S latest economic forecast said, with a brighter outlook for 2021 as growth is predicted to rise to 1.8 per cent.
The forecasts are based on the assumption that the UK exits the EU by 31 January 2020 and has a “clear line of sight to an ambitious trade deal”, which the CBI defines as aligning with EU rules where essential for frictionless trade.
It claimed the main risk to the outlook remains continued Brexit-related uncertainty, particularly the threat of a no-deal exit from the EU, while a further escalation in Us-china trade tensions would deliver an additional hit to global growth, harming the UK economy.
Domestic growth is expected to remain largely driven by household spending, thanks to further, albeit slower, rises in real earnings.
Rain Newton-smith, CBI chief economist, said: “Alongside perennial Brexit uncertainty, [businesses] are also contending with softer global demand. Should these dual headwinds subside, we expect a gradual pick-up in activity.
“But the bigger picture is one of fairly modest growth over the next couple of years – growth that should be far better, given the UK’S relative strengths.
“If firms can see a close deal with the EU on the horizon, with no further Brexit cliffedges to worry about, investment will be unlocked.”