The uncertainty of Brexit hung heavy over chancellor Philip Hammond’s first Autumn Statement to parliament on 23 November 2016.
The government’s first major fiscal event since the EU referendum in June focused on the measures designed to “prepare our country to seize the opportunities ahead”.
OBR Predicts Growth Slow Down
The Office for Budget Responsibility (OBR) forecast economic growth to be 2.1% in 2016, higher than predicted in March.
However, growth is expected to slow down to 1.4% in 2017 due to lower investment and weaker consumer demand.
Inflation is also to rise over the next 2 years as a result from sterling depreciation.
Despite the downturn, growth is expected to recover to 1.7% in 2018, 2.1% in 2019/20 and 2% in 2021.
In his speech, the chancellor said:
“While the OBR is clear that it cannot predict the deal the UK will strike with the EU, its current view is that the referendum decision means that potential growth over the forecast period is 2.4 percentage points lower than would otherwise have been the case.”
Simon Kirby, head of macroeconomic modelling and forecasting at the National Institute of Economic and Social Research, said:
“The OBR’s latest forecasts make for sobering reading. They expect the economy to slow significantly over the course of the next year. They expect per capita real disposable incomes to fall by ½ per cent in 2017, as wage growth fails to track the pick-up currency depreciation induced increase in consumer prices.”
In her speech at the Confederation of British Industry (CBI) annual conference, Theresa May expressed of opportunities for businesses as the country continues negotiations to leave the European Union.
The prime minister addressed a more direct and flexible approach on free trade in order to set out new and dynamic trade agreements:
“Britain can trade freely with others according to what’s in their own best interests and those of their people.”
In response to the speech, Carolyn Fairbairn, director general at CBI, said:
“It’s vital that the on-the-ground expertise of business is used to help get the best deal for the UK and we welcome the prime minister’s commitment to providing clarity on her negotiation plans, where possible.”
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