{"id":2651,"date":"2018-11-09T00:06:07","date_gmt":"2018-11-09T00:06:07","guid":{"rendered":"http:\/\/baileyonlineclassroom.com\/europeandrussiablog\/?p=2651"},"modified":"2018-11-09T00:06:07","modified_gmt":"2018-11-09T00:06:07","slug":"uk-economic-growth-tipped-to-be-slowest-in-europe-next-year","status":"publish","type":"post","link":"https:\/\/baileyonlineclassroom.com\/europeandrussiablog\/2018\/11\/09\/uk-economic-growth-tipped-to-be-slowest-in-europe-next-year\/","title":{"rendered":"UK economic growth tipped to be slowest in Europe next year"},"content":{"rendered":"<p>The UK will sink to the bottom of the European economic growth league next year to join Italy as the slowest-growing economy in the EU, before falling further the year after to anchor the table alone, according to\u00a0<a class=\"u-underline\" href=\"https:\/\/www.theguardian.com\/world\/european-commission\">European commission<\/a>\u00a0forecasts.<\/p>\n<p>The\u00a0<a class=\"u-underline\" href=\"https:\/\/www.theguardian.com\/business\/live\/2018\/nov\/08\/german-exports-slide-trade-war-markets-fed-business-live?page=with:block-5be417cde4b0b8cf943c7d7e#block-5be417cde4b0b8cf943c7d7e\">EU\u2019s\u00a0<\/a><a class=\"u-underline\" href=\"https:\/\/www.theguardian.com\/business\/live\/2018\/nov\/08\/german-exports-slide-trade-war-markets-fed-business-live?page=with:block-5be417cde4b0b8cf943c7d7e#block-5be417cde4b0b8cf943c7d7e\">gloomy predictions<\/a>\u00a0are based on a soft Brexit \u2013 meaning Britain is expected to lag behind all its EU peers even if Theresa May can reach a\u00a0<a class=\"u-underline\" href=\"https:\/\/www.theguardian.com\/politics\/2018\/nov\/08\/david-davis-no-deal-brexit\">deal with Brussels<\/a>\u00a0before 29 March.<\/p>\n<p>The commission forecast that\u00a0<a class=\"u-underline\" href=\"https:\/\/www.theguardian.com\/business\/2018\/oct\/09\/sharp-slowdown-consumer-spending-cools-uk-retail-sales\">consumer spending growth<\/a>\u00a0will remain weak, continuing a subpar performance since the EU referendum in June 2016. It said business investment would remain subdued, while external\u00a0<a class=\"u-underline\" href=\"https:\/\/www.theguardian.com\/business\/2017\/sep\/08\/uk-exports-eu-weak-pound-trade-europe\">demand for UK goods<\/a>\u00a0will dwindle. The commission predicted the result would be GDP growth of 1.2% in 2019 and 2020.<\/p>\n<p>The euro area of 19 countries including Germany, France and Italy is forecast to slow from a growth rate of 2.1% this year to 1.9% in 2019 and 1.7% in 2020, as the wider region enters a period of weaker growth\u00a0<a class=\"u-underline\" href=\"https:\/\/www.theguardian.com\/business\/2017\/aug\/01\/eurozone-economy-grows-twice-as-fast-as-the-uks-figures-show\">following the strongest year<\/a>\u00a0of the past decade in 2017.<\/p>\n<aside class=\"element element-rich-link element-rich-link--tag element--thumbnail element-rich-link--upgraded\">\n<div class=\"rich-link tone-news--item rich-link--pillar-news\">\n<div class=\"rich-link__container\">\n<div class=\"rich-link__read-more\">\n<div class=\"rich-link__arrow\"><\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/aside>\n<p>It comes as the wider global economy is unsettled by\u00a0<a class=\"u-underline\" href=\"https:\/\/www.theguardian.com\/business\/2018\/jul\/18\/donald-trump-may-kill-the-global-recovery\">Donald Trump\u2019s trade disputes<\/a>\u00a0with China and Europe, which have reduced demand for manufactured goods and stifled business investment.<\/p>\n<div id=\"dfp-ad--inline1\" class=\"js-ad-slot ad-slot ad-slot--inline ad-slot--inline1 ad-slot--rendered\">\n<div class=\"ad-slot__label\"><\/div>\n<\/div>\n<p>Despite the weaker outlook for the UK economy, growth figures have shown Britain managing a better performance than the eurozone over recent quarters.<\/p>\n<p>Statistics due on Friday are expected to show UK economic growth of 0.6% for the third quarter. Economists at HSBC believe Germany is likely to record its first drop in quarterly economic output, of 0.1%, for more than three years.<\/p>\n<p>The wide range of potential outcomes from the Brexit talks will also have a significant bearing on the future path of the economy. Assuming a deal is secured, analysts at the consultancy Capital\u00a0<a class=\"u-underline\" href=\"https:\/\/www.theguardian.com\/business\/economics\">Economics<\/a>\u00a0believe growth could accelerate to 2.2% next year and remain around 2% in 2020.<\/p>\n<p>The commission forecasts came as the International Monetary Fund also sounded the alarm over the mounting risks from no-deal Brexit, while warning about the threat from\u00a0<a class=\"u-underline\" href=\"https:\/\/www.theguardian.com\/world\/2018\/nov\/05\/xi-jinping-promises-to-open-chinese-markets-in-trade-war-joust-with-trump\">trade disputes<\/a>\u00a0around the world and high levels of\u00a0<a class=\"u-underline\" href=\"https:\/\/www.theguardian.com\/world\/2018\/oct\/21\/fears-about-italian-banks-expected-to-grow-following-downgrade\">Italian government debt<\/a>.<\/p>\n<p>In the IMF\u2019s latest health check on the region, it warned the European economy would probably\u00a0<a class=\"u-underline\" href=\"https:\/\/www.theguardian.com\/business\/2018\/oct\/30\/eurozone-growth-slumps-to-lowest-level-in-over-four-years\">run into turbulence<\/a>\u00a0in the next few years.<\/p>\n<p>The Washington-based fund said all likely Brexit outcomes would have a negative cost for the economy, although it warned a\u00a0<a class=\"u-underline\" href=\"https:\/\/www.theguardian.com\/politics\/2018\/oct\/12\/uk-consumers-could-lose-eu-legal-rights-in-event-of-no-deal-brexit-legal-protection-products-services-eu-traders\">no-deal scenario<\/a>\u00a0would have the biggest downsides.<\/p>\n<p>\u201cNo-deal Brexit would lead to high trade and non-trade barriers between the UK and the rest of the EU, with negative consequences for growth,\u201d it said.<\/p>\n<p>The IMF also warned the\u00a0<a class=\"u-underline\" href=\"https:\/\/www.theguardian.com\/world\/2018\/may\/31\/italys-populist-leaders-strike-deal-resurrect-coalition\">populist Italian government<\/a>\u00a0to tackle its high levels of government borrowing before time runs out.<\/p>\n<p>In a rebuke to the Italian government, which is currently\u00a0<a class=\"u-underline\" href=\"https:\/\/www.theguardian.com\/world\/2018\/oct\/22\/eu-expected-to-seek-revision-of-italys-draft-budget\">locked in a bitter standoff<\/a>\u00a0with the commission over its budget plans for next year, the IMF regional director for Europe, Poul Thomsen, said Italy needed to urgently rebuild strength in its public finances.<\/p>\n<p>\u201cWe basically agree with the commission\u2019s assessment [on Italy\u2019s budget],\u201d he said.<\/p>\n<p>The commission has demanded Italy resubmit its\u00a0<a class=\"u-underline\" href=\"https:\/\/www.theguardian.com\/business\/2018\/sep\/27\/the-euro-and-stock-markets-fall-amid-italy-budget-fears\">tax and spending plans\u00a0<\/a>ahead of a deadline next week, because it argues the proposals break commission rules over government borrowing. The Italian government has so far however refused to change course, insisting it will not\u00a0<a class=\"u-underline\" href=\"https:\/\/www.theguardian.com\/business\/2018\/nov\/05\/eurozone-finance-ministers-behind-eu-italy-budget-dispute\">\u201ckneel\u201d before the EU<\/a>.<\/p>\n<p>Although Italy\u2019s tax and spending plans may help stimulate its economy, Thomsen said they could have the opposite effect, given that Italy has the second-highest national debt in\u00a0<a class=\"u-underline\" href=\"https:\/\/www.theguardian.com\/world\/europe-news\">Europe<\/a>, after Greece, of more than 130% of GDP.<\/p>\n<p>\u201c[Growth is] not going to come from fiscal stimulus,\u201d Thomsen said. \u201cItaly does not have space for [raising spending]. You could see a situation where expansion of fiscal policy had a negative impact on growth \u2026 the cost to Italian borrowing will go up and you actually end up slowing the economy.\u201d<\/p>\n<div class=\"contributions__epic \">\n<div class=\"\">\n<div>\n<p>&nbsp;<\/p>\n<\/div>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>The UK will sink to the bottom of the European economic growth league next year to join Italy as the slowest-growing economy in the EU, before falling further the year after to anchor the table alone, according to\u00a0European commission\u00a0forecasts. The\u00a0EU\u2019s\u00a0gloomy predictions\u00a0are based on a soft Brexit \u2013 meaning Britain is expected to lag behind all its EU peers even if&#8230; <a href=\"https:\/\/baileyonlineclassroom.com\/europeandrussiablog\/2018\/11\/09\/uk-economic-growth-tipped-to-be-slowest-in-europe-next-year\/\">Read more &raquo;<\/a><\/p>\n","protected":false},"author":108,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[77],"class_list":["post-2651","post","type-post","status-publish","format-standard","hentry","category-article","tag-the-guardian"],"_links":{"self":[{"href":"https:\/\/baileyonlineclassroom.com\/europeandrussiablog\/wp-json\/wp\/v2\/posts\/2651","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/baileyonlineclassroom.com\/europeandrussiablog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/baileyonlineclassroom.com\/europeandrussiablog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/baileyonlineclassroom.com\/europeandrussiablog\/wp-json\/wp\/v2\/users\/108"}],"replies":[{"embeddable":true,"href":"https:\/\/baileyonlineclassroom.com\/europeandrussiablog\/wp-json\/wp\/v2\/comments?post=2651"}],"version-history":[{"count":1,"href":"https:\/\/baileyonlineclassroom.com\/europeandrussiablog\/wp-json\/wp\/v2\/posts\/2651\/revisions"}],"predecessor-version":[{"id":2652,"href":"https:\/\/baileyonlineclassroom.com\/europeandrussiablog\/wp-json\/wp\/v2\/posts\/2651\/revisions\/2652"}],"wp:attachment":[{"href":"https:\/\/baileyonlineclassroom.com\/europeandrussiablog\/wp-json\/wp\/v2\/media?parent=2651"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/baileyonlineclassroom.com\/europeandrussiablog\/wp-json\/wp\/v2\/categories?post=2651"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/baileyonlineclassroom.com\/europeandrussiablog\/wp-json\/wp\/v2\/tags?post=2651"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}