UK: Negative real wage growth has slowed GDP growth
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While the UK was remarkably resilient to Brexit uncertainties in H2 16, the economy has begun to slow, as negative real wage growth has hit consumption.
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We expect GDP to grow around 0.3% q/q per quarter throughout the forecast horizon. As growth is below trend, we still think it is likely that the unemployment rate will increase slightly.
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Inflation has risen significantly due to the weaker GBP and is expected to remain high in the years to come.
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We expect the Bank of England to remain on hold despite higher inflation due to growth concerns and high political uncertainty.
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