EU Slashes Growth Forecasts for UK Economy Ahead of Brexit Talks

In this photo illustration the new £1 pound coin is seen on April 4, 2017 in Bath, England. Currency experts have warned that as the uncertainty surrounding Brexit continues, the value of the British pound, which has remained depressed against the US dollar and the euro since the UK voted …
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The unelected European Commission has made dire predictions for the UK economy ahead of Brexit trade talks, contradicting the recent claims of the Chancellor.

Chancellor Phillip Hammond had used TV appearances over the weekend to hint that the UK was balancing its books, reducing the deficit, and could move to end austerity soon.

The EU annual assessment of the British economy was leaked to The Sunday Times, with earlier versions available online. It says the economy has already “slowed markedly” and growth will be “subdued” in coming years.

“Economic growth in the UK has slowed markedly since the start of 2017,” the report says. “GDP growth is expected to remain subdued, slowing gradually to 1.3 per cent in 2018 and to 1.1 per cent per cent in 2019.”

The report blames “the squeeze on real disposable incomes” and “stagnation of labour productivity”. The Office for Budget Responsibility (OBR) predicted growth of 1.4 per cent this year and 1.3 per cent in 2019 at the time of the budget last November.

In the Commission’s economic forecast for the UK in winter 2018, released earlier in March, the body insisted their predictions were impartial, not bias, and not influence by the Brexit vote.

It said: “Given the ongoing negotiations on the terms of the UK withdrawal from the EU, our projections for 2019 are based on a purely technical assumption of status quo in terms of trading relations between the EU27 and the UK.

“This is for forecasting purposes only and has no bearing on the talks underway in the context of the Article 50 process.”

Meanwhile, Mr. Hammond is expected to announce this week that borrowing will be £10 billion lower this year than previously forecast.

Sunday night, he said growth and spending cuts had meant “we can spend more on public services instead of debt interest, and enabled people to keep more of what they earn”.

He added: “Thanks to the hard work of the British people, we’re now at a turning point. Over the last two quarters we have seen the first signs that productivity growth – the key to higher wages – may be increasing and this year we are forecast to see the beginning of the first sustained fall in debt for a generation.

“It has been a long road and there is still work to be done, but I am confident that there is light at the end of the tunnel.”

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