Experts say Brexit will not cause a recession despite Project Fear scaremongering from Osborne before the EU referendum
Although trading conditions are much better than Remain campaigners suggested, economists say "a sharp slowdown" in growth is to come
BRITAIN will avoid recession despite Project Fear scaremongering before the referendum, the British Chambers of Commerce said last night.
But their experts have downgraded their growth forecasts for next year from 2.2% to 1.8% in 2016, from 2.3% to 1.0% in 2017, and from 2.4% to 1.8% in 2018.
Economists for the business lobby group claim: “individual businesses continue to report strong trading conditions” but “the overall picture suggests a sharp slowdown in UK growth lies ahead.”
They added: “Our forecast suggests that the UK is likely to avoid a recession, but with the health warning that businesses are still digesting the result of June’s EU referendum and the challenges and opportunities to come.”
Brexit-backer John Longworth quit his job as the head of the British Chambers of Commerce in the spring over David Cameron’s Project Fear scare stories aimed at keeping Britain in the EU.
Mr Longworth had been suspended from his post after after suggesting Britain would be better off outside the EU — to the fury of Downing Street.
Ahead of the referendum, former Chancellor George Osborne claimed Brexit would lead to “DIY recession, because that’s what the evidence shows we’ll get if we vote to leave the EU”.
He said: “With exactly one month to go to the referendum, the British people must ask themselves this question: can we knowingly vote for a recession?”
His claims were also repeated by former PM David Cameron in a bid to scare people against voting to the EU.
But now the economic experts say Britain will not enter recession because of the historic result.
However in their first economic forecast since the Brexit result, the BCC say “employment growth is expected to slow in 2017, as uncertainty weighs on recruitment intentions.”
They predict that GDP growth will slow sharply in the short-term — “quarter-on-quarter growth in Q3 and Q4 2016 is forecast to slow down to 0.1 per cent”
If that were to be correct the it would be Britain’s weakest rate of growth since 2009.
The UK is likely to avoid a recession... but the overall picture suggests a sharp slowdown in UK growth lies ahead.
Dr Adam Marshall, the BCC’s Acting Director General, said last night: “Although individual businesses continue to report strong trading conditions, the overall picture suggests a sharp slowdown in UK growth lies ahead.
“Our forecast suggests that the UK is likely to avoid a recession, but with the health warning that businesses are still digesting the result of June’s EU referendum and the challenges and opportunities to come.”
He added: “Stability, clarity and action must continue to be the watchwords for government.
“Aside from a clear timetable for negotiations with the EU, ministers must act to support business investment and confidence.
“They should start with the long list of business-boosting infrastructure projects that have been put on hold for far too long - including a firm decision on a new airport runway, new nuclear investment, and road and rail schemes.”
But Suren Thiru, the group’s Head of Economics, warned: we have “deep-rooted structural issues, such the size of the UK’s current account deficit, leaving the UK increasingly exposed to economic shocks.”
“Despite the likely improvement in the UK’s trade position, the significant imbalances currently facing the UK economy are expected to persist through the forecast period.”
Brexit backing Tory MP James Cleverly said the findings showed “some of the more extreme claims made by the Remain campaign are failing to be proven correct.”
He added: “Although no economic prediction can ever be certain, it is welcome news that Britain is likely to avoid the threatened Brexit recession.”