CEBR warns UK economy could face slowdown due to weak exports
The Centre for Economics and Business Research (CEBR) has warned in a new forecast that the current economic recovery in the UK may not be sustainable.
Weak exports and decreasing investment in business means that any increase over the next five years could hinge on continued growth in household spending.
The CEBR forecast noted that net trade will “act as a drag on growth over this time frame as the UK continues to import far more than it exports".
From 2015 to 2020, the trade deficit is expected to be at around £77bn a year. The CEBR expects this will mean the UK economy will grow by 2.5% this year, 2% in 2016 and average 1.7% a year until 2020.
The figures are in stark contrast to the predictions of the Office for Budget Responsibility, which expects growth to remain above 2%.
Scott Corfe, CEBR head of macroeconomics, highlighted the way that poor export growth, low investment levels and the general global economic situation can all play their parts in the forecast.
“It’s clear that the global economy has deteriorated significantly over the past few months and there are significant downside risks to the UK’s own prospects,” Corfe said.
Corfe's other predictions included the Bank of England keeping interest rates on hold until at least the middle of next year and that when the situation did change, rate increases would be “very gradual” and would only hit 2% by 2020.