UK: Real GDP growth will slip to 1.5 percent in 2017 – Wells Fargo

Analysts at Wells Fargo forecast that real GDP growth in the United Kingdom will slip to 1.5 percent in 2017 from 1.8 percent last year before edging back up to 1.7 percent next year.  

Key Quotes

“The U.K. economy grew 0.3 percent (not annualized) in Q1 2017. The growth rate is a marked slowdown from the 0.7 growth rate registered in Q4 2016, and is the slowest sequential growth rate since Q1 2016. Despite the downshift, real GDP is still up 2.1 percent year over year.”

“Healthy production growth is supported by strength in export volumes, which have recently trended higher. Economic activity in other countries is beginning to pick up, which should continue to buoy U.K. export growth. Also supporting exports is the relative weakness of the British pound, which took another hit following the general election on June 8. Prime Minister May’s conservative Party did not win enough seats to form an absolute majority, which should weaken the country’s position on the Brexit negotiating table.”

“In our view, the election results are not likely to have meaningful effects on the British economy in the foreseeable future, and we are not inclined to make significant changes to our economic forecast at this time. After political uncertainty in the United Kingdom starts to dissipate, there is the chance that sterling depreciation could eventually be reversed.”