Brexit fallout sees CBI slash economic growth target

Chancellor Philip Hammond is under pressure to boost the economy. Picture: John Devlin

Chancellor Philip Hammond is under pressure to boost the economy. Picture: John Devlin

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Britain’s economy will suffer a marked slowdown in growth in the coming year as businesses and consumers curb spending in the wake of the Brexit vote, the CBI warned today.

The lobby group has cut its forecast for GDP growth in 2017 to just 1.3 per cent from a previous estimate of 2 per cent while warning that uncertainty over Brexit talks will hit business investment, with household budgets coming under pressure from rising inflation. It is sticking with its growth forecast of 2 per cent for 2016.

The CBI is calling on Chancellor Philip Hammond to deliver an “ambitious domestic agenda” in his Autumn Statement on 23 November to help boost business confidence.

READ MORE: Scottish business optimistic despite vote to leave EU

It wants the UK government to ramp up infrastructure projects, following on from the recent Heathrow expansion announcement, and encourage investment through innovation, such as targets for joint public and private expenditure on research and development. The CBI forecasts that consumer spending growth will tumble from 2.7 per cent in 2016 to 1.2 per cent next year, before halving to 0.6 per cent in 2018. This will be only partially offset by a rise in exports.

Chief economist Rain Newton-Smith said: “Business leaders will be looking to the Chancellor to incentivise investment and instil confidence when he delivers his Autumn Statement.”

Meanwhile, the National Institute of Economic & Social Research today forecast growth of 1.4 per cent in the UK economy during 2017.

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