Undeniably, 2016 shocked the world. From Britain choosing to leave the EU and America voting Trump as their next leader, 2017 is bound to feel the aftershock. Following the huge financial changes of the preceding year, Acumen Financial has decided to round up our top 5 economic predictions for 2017.
UK economic predictions 2017
According to a recent article that appeared in the Financial Times, UK economic growth predictions for the coming year will see a significant financial downfall. Despite being one of the fastest-growing economies in 2016, some economists are predicting that the country will feel post-Brexit Economic tremors throughout 2017. “The current global economic environment as the most uncertain in modern history,” according to Ethan Ilzetzki, a lecturer at the London School of Economics.
Our economic predictions for 2017 are as follows:
Slowed UK economic growth
In 2016, the British economy coped surprisingly well following Brexit. However, it seems our ability to retain financial control was due to pre-referendum monetary stimulus. As such, the real impact of Brexit has not yet been felt. However, many experts have cast their UK economic growth predictions and it seems the consensus is a slow rate of growth, dropping from 2.1% in 2016 to 1.5% in 2017.
Rise in inflation
With the depreciating value of the British Pound, rising inflation rates are almost certain. Whilst a weak pound may see the number of exports increase, “the negative impact of higher prices on disposable incomes is likely to be somewhat stronger than the positive impact of a lower value of sterling,” according to David Miles, former member of the MPC and professor of economics at Imperial College London.
In real terms, a bi-product of increased inflation is usually slower salary growth, with some economists stating unemployment levels may rise, as businesses begin to restrain costs.
Reduced consumer spends
When animosity is rife, consumer spending often slows down. With a fall in wage growth, and the uncertainty surrounding post-Brexit Britain, consumers are predicted to reduce spending, resulting in a faltering economy.
Reduced business investment
Following on from business owners safeguarding their companies, it is predicted that the rate of business investments is set to slow due to the uncertainty surrounding Brexit. “We think the uncertain reality will hit home [in 2017], with a fall in investment and slowdown in consumption as inflation erodes real wages,” says Liz Martins, UK economist at HSBC.
While these are simply UK economic predictions for 2017, there are very limited forecasts surrounding finance after Brexit. Some economists have adopted a more positive financial outlook, stating that Brexit may in fact increase economic growth. For more information regarding any of our financial services, contact Acumen today on 0151 520 4353.