The EU Commission has downgraded its expectations for UK economic growth – predicting Britain will fall behind its eurozone neighbours in 2019.
The EU’s executive arm said it had pencilled in a 1.1% increase in gross domestic product for the country in the year of the looming divorce – assuming there is no change to Britain’s trading status.
But the latest forecasts pointed to Brexit uncertainty hitting investment, with growth of 1.5% this year and slowing further in the following two years.
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Its wider predictions pointed to the best growth in the eurozone for a decade this year – with the UK even being outperformed, in growth terms, by Greece.
The Commission upgraded growth in the 19-nation bloc from 1.7% to 2.2%, slipping slightly to 2.1% followed by 1.9% in 2019.
Eurozone recovery, which has largely lagged that achieved in the UK by some margin since the financial crisis, has been bolstered by a pick-up in the world economy and stimulus from the European Central Bank (ECB).
The Bank is persisting with, though reducing, its asset purchase programme and low interest rates in a bid to help boost activity further – raising wage levels and therefore inflation in the process.
EU commissioner Pierre Moscovici said: “After five years of moderate recovery, European growth has now accelerated.
“We had several major elections; they are now behind us and political uncertainty …. has continued to decrease from the high levels experienced a year ago.”
He said he could not speculate on “any political development anywhere” as Britain’s exit from the EU, the rise in the value of the euro and the independence issue in Spain’s Catalonia region remained risks to the forecast.