0116 GMT August 18, 2019
Pay growth should also start to edge up while inflation slips back, easing the strain on the cost of living, The Telegraph reported.
The forecasts from the Confederation of British Industry (CBI) predict that economic growth will remain flat overall, however, at 1.5 percent in 2017, 1.5 percent in 2018 and 1.3 percent in 2019.
“Jobs are still being created, so the strong levels of employment will support consumption growth,” said Rain Newton-Smith, the CBI’s chief economist, adding that households are saving less to pay for some of that extra spending.
Business investment growth is expected to slow over the coming year from 2.4 percent in 2017 to 1.2 percent in 2018 before recovering partially to 1.6 percent in 2019. “Business investment growth has been disappointing — given how strongly the economy has been growing, you would expect it to be stronger,” she said.
“The key thing businesses want is a transition agreement [with the EU], ideally by Christmas.”
If the Government cannot reach a deal, more businesses will start to implement their Brexit contingency plans — by March, a year before the UK is due to leave the EU, 60 percent of companies will have started implementing those plans.
“As every month ticks by, the UK is losing some jobs and investment here,” Newton-Smith said. A shortage of skills and the prospect of lower net immigration is also hitting investment, she said.
While the industrial strategy aims to improve skills, Newton-Smith said this is only likely to have a substantial effect over the next 10 to 20 years.
The CBI does expect exports to keep rising by 3 percent next year and 3.1 percent in 2019, outstripping the 2.2 percent rise in imports each year and so boosting GDP and helping to rebalance the economy a little.
That chimes with a survey from EEF, the manufacturing industry group, which shows strong export demand helping companies grow and encouraging them to invest.
“Stronger global growth has cemented the foundations for growth in manufacturing this year, but the sector’s contribution to the UK economy has been greater than most expected,” said EEF chief economist Lee Hopley.
“There is some confidence that this momentum will carry into 2018, but as we head towards the Brexit endgame, we need manufacturing to produce the same trick of broad-based growth again next year. As we see more companies investing and capitalizing on global growth, we’ve become more upbeat in our forecasts for the growth outlook.”