The latest EY ITEM Club forecast has cut its GDP growth projections to 1.3% for 2019 (from 1.5% in the EY ITEM Club Winter Forecast) and 1.5% for 2020 (down from 1.7%).
Despite likely solid-looking GDP growth in the first quarter of 2019, the downward revision for 2019 primarily reflects the prolonged Brexit uncertainty, following the decision to delay the UK’s exit from the EU to a flexible 31 October deadline. A weaker global economic environment has also impacted the UK’s growth outlook.
After an unexpectedly resilient performance last year, which seemingly extended into Q1 2019, the EY ITEM Club forecasts consumer spending growth to slow in the near term. Consumer spending is expected to grow by 1.4% in 2019 and 1.7% in 2020. According to the Forecast, consumer price inflation is expected to average at 1.9% in 2019 before rising to 2.0% in 2020. Meanwhile earnings growth is projected to be 3.2% in both 2019 and 2020.