Which Way For the British Economy?

The British Chamber of Commerce has forecast that the UK's economy will grow by 1.3% in 2018.

This is a downgrade from their previous expectation of growth of 1.4%, with expected growth in 2019 also cut from 1.5% to 1.4%.

The reason for the downgrade was cited as being the "more lacklustre outlook for consumer spending, business investment and trade." according to the Chamber.

Business investment is also predicted to drop to 0.9% in 2018, a sharp drip from the 2.4% recorded in 2017. The primary reason for this is the "uncertainty over the UK’s future relationship with the EU." says the Chamber. This is expected to improve to 1.2% next year however.

Exports could suffer over the next few years according to the Chamber as "exporters will struggle to recover the ground lost in the year so far, as growth in key markets moderates."

Exporters have responded to the fall in the value of the pound by raising prices rather than increasing volume, with consequences for net trade.

The services sector, a large contributor to the UK economy is also set to suffer, with output of 1.2% the lowest since 2010, on the back of weaker consumer spending and the continued pressure on household finances. The Chamber said that wage growth is not of a sufficient level to: "translate into materially stronger spending over the forecast horizon".

Growth in the construction sector is also expected to slow, with growth of 0.7% this year, down from 5.7% last year.

While some pundits have promoted the idea that the UK market is undervalued, the weakness in the economy may support the current value of the market rather than signal any bargains.

Your financial adviser can construct a long term plan for you that will enable you to invest for the long term no matter the short term fluctuations.

The value of investments and income from them may go down as well as up and you may not get back the original amount invested.

Information is based on our current understanding of taxation legislation and regulations which is subject to change.