The average forecast for UK economic growth has more than tripled since Britain’s vote to leave the European Union (EU) as economists monitored by HM Treasury revise their predictions upwards.
This is Money reports the average forecast for growth in 2017 has risen from just 0.5 per cent, as predicted in July 2016, to 1.6 per cent.
Forecasts by the Bank of England, the United Kingdom’s state-owned central bank, have proven particularly volatile. Governor Mark Carney slashed predicted growth to 0.8 per cent after the Brexit vote, before quietly revising upwards to first 1.4 per cent and then 2 per cent.
May 2016: Bank of England forecasts 2.3% GDP growth 2017.
Aug: downgrades to 0.8%
Nov: upgrades to 1.4%
Worth paper written on?
— Andrew Neil (@afneil) February 2, 2017
Carney, a Canadian national and long-time Goldman Sachs employee, came under fire during the referendum for appearing to weigh in on the side of the Remain campaign and former Chancellor of the Exchequer George Osborne when he claimed that a Leave vote “could” plunge Britain into a technical recession.
In reality, the United Kingdom proved to be the fastest growing G7 economy of 2016, defying forecasters to grow by 0.6 per cent in the final three months of the year.
The fall in the value of the pound, which was welcomed as an economic positive by U.S. President Donald J. Trump, former Bank of England governor Mervyn King, and former IMF deputy director Ashoka Mody among others, has boosted exports and foreign investment without yet hurting consumers. In addition, wage growth is outpacing inflation.
Confidence has risen sharply in the commercial world, with only 15 per cent of bosses surveyed by the Institute of Directors still predicting a fall in revenue compared to 2016.
Small and medium-sized businesses are also confident for the year ahead, with 57 per cent anticipating net annual profits of four per cent per over the next three years. Twenty-two per cent anticipate net annual profits over eight per cent.
Expansion and exports are seen as key to their future strategy and Liam Fox’s new Department for International Trade is laying the groundwork for multiple global trade agreements. The UK will be empowered to sign such deals once it has left the European Union’s customs union and is no longer bound by its restrictive Common Commercial Policy.