The UK economy has weathered the worst of the Brexit financial fallout and should be able to continue without “too much damage”, experts have said.
The Institute of Chartered Accountants in England and Wales – the major financial body – has published the report after official economic forecasts indicated a positive outlook for the UK.
The key findings include pay growth outstripping inflation, unemployment falling to a record low, and fiscal austerity being relaxed.
The figures also suggest that the UK economy will grow quicker than expected in 2019, from 1.3 to 1.5 per cent. Likewise, GDP growth accelerated immediately after the EU referendum, with the slowdown in 2017 and 2018 more “modest” than initially predicted.
And while Brexit and political uncertainty will continue to loom over British businesses like a dark cloud, the ICAEW now expects the economy to face whatever storm is thrown at it.
The accounting body also congratulated consumers, businesses and policy makers, such as the Bank of England (BoE), for their role in “insulating the economy from political uncertainty” since Brexit deliberations began in the summer of 2016.
Commenting on the report, Michael Izza, chief executive of the ICAEW, said Brexit will influence the economy for many years to come, but the impact should be “manageable”.
“There is no doubt that heightened Brexit-related uncertainty is weighing on business sentiment. Household and company spending and saving decisions are influenced by expectations of the future economic situation. But as long as a ‘no-deal’ Brexit is avoided, history suggests that the current ‘new normal’ of elevated uncertainty may not impact as much as some expect,” he said.
“Of course, cuts in investment by some businesses in response to uncertainty are unlikely to be reversed, even once the UK’s departure from the EU has been resolved. But if policymakers remain on the ball, the overall macroeconomic effect of the Brexit limbo businesses currently find themselves in should be manageable.”