UK GDP growth has been confirmed at 0.5 per cent for the third quarter, down from 0.7 per cent in the second quarter, but up from 0.4 per cent in the first quarter.
In this week’s Autumn Statement, Chancellor Philip Hammond said the Government was working towards forecasts of 2.1 per cent GDP growth this year and 1.4 per cent in 2017, down from the 2.2 per cent predicted before the Brexit vote.
IHS Markit predicts fourth quarter GDP growth of 0.4 per cent will result in full year GDP growth of 2.1 per cent.
GDP was boosted by consumers, whose spending was up 0.7 per cent over the quarter, while the weakened pound supported foreign orders for UK goods and services. It also encouraged spending by visitors to the UK.
IHS Markit chief economist for the UK and Europe Howard Archer says growth on the output side of the economy was lopsided towards the services sector.
Archer predicts GDP growth will fall to 1.2 per cent in 2017 and 2018, as consumer fundamentals deteriorate and uncertainty is heightened by the triggering of Article 50.
Although a weaker pound should support UK exports, Archer warned lacklustre growth in the Eurozone was set to limit the upside.
“Eurozone growth is seen being pressurised in 2017 by heightened political uncertainty across the region, with general elections in the Netherlands, France and Germany as well as challenging political situations in Italy and Spain.
“The UK’s vote for Brexit and the election of Donald Trump as US President has highlighted the potential for political shocks.”