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UK Faces Sluggish Growth Despite Unemployment Rate Falling

Now that we are into the final stretch of 2017 and fast approaching the new year, global market analysts are coming out with their predictions and market estimates. The Confederation of British Industry (CBI), which is the biggest business group in Britain, has said that while the global economy will do well in the next couple of years, the UK market will have a rather sluggish 2018.

The GDP in the UK for 2017 was 1.5 percent and the CBI report expects that number to remain the same in 2018, before dropping to 1.3 percent in 2019. The global economy is expected to reach 3.6 percent by the end of the year and then climb to 3.7 percent by the end of 2018.

The CBI report also said that unemployment rates in the country would drop to a 44 year low in 2018. The current rate of unemployment in 2017 is at 4.3 percent and that will drop to 3.9 percent next year as companies go on a hiring spree.

Financial Times

The report says that while trade and economic growth in the country could show positive signs, the overall inflation rate will hurt the country as it is expected to be more than the 2 percent that the Bank of England (BoE) has estimated. CBI also stated in its report that its market predictions for the UK, especially in 2019 had a lot of risk associated with it.

This is due to the fact that Brexit negotiations could have a major negative impact on the economy and disrupt the financial climate and business growth. The report assumes that the UK and the EU will agree upon a transition period that will take place during the first quarter of 2018.

While other market analysts downplayed the CBI report’s negative outlook, a recent survey from Deloitte shows that UK consumers are concerned about the economy. The survey listed out a number of consumer concerns and revealed that 68 percent of those surveyed put down the health of the economy as their number one concern; while their second biggest concern was rising inflation.

In a statement, Rain Newton-Smith, CBI chief economist said

We expect domestic demand to remain soft. Household spending will remain under pressure from squeezed real wages and Brexit uncertainty will weigh on business investment. But encouragingly, we should see more support from net exports, buoyed by the lower pound and a resurgent global economy

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