UK economic growth hobbled by Brexit

  • 24/11/2016
Chancellor of the Exchequer Phillip Hammond (Getty)
Chancellor of the Exchequer Phillip Hammond (Getty)

Britain has cut its 2017 growth forecast by nearly half, in the wake of Brexit.

The Office for Budget Responsibility (OBR), Britain's independent budget forecasters, said gross domestic product would grow by 1.4 percent in 2017, down from an estimate of 2.2 percent made in March, before voters decided to leave the EU.

UK finance minister Philip Hammond announced the official forecasts on Wednesday. He said the weak public finances leave him little room to ramp up public spending or make big cuts to taxes.

He said the government would need to borrow billions more pounds over the next five years, with net public sector debt expected to rise to 90.2 percent in 2017/18, up from a projection of 81.3 percent in March.

It's the country's first budget statement since UK voters decided to leave the European Union.

"Our task now is to prepare our economy to be resilient as we exit the EU and match-fit for the transition that will follow," Mr Hammond told the British parliament.

Britain's economy has so far largely withstood the shock of the Brexit vote, wrong-footing the Bank of England and almost all private economists who expected a bigger immediate hit.

Brexit supporters, who say Britain's economy is likely to fare much better than the widespread views of a slowdown, are likely to question the credibility of the latest OBR forecasts.

Around 200 supporters of leaving the European Union have gathered outside the British parliament to demand Prime Minister Theresa May deliver Brexit.

In a June 23 referendum, 51.9 percent, or 17.4 million people, voted to leave the EU while 48.1 percent, or 16.1 million people, voted to stay.

Waving British flags, the protesters chanted "Brexit means Brexit, out, out, out" and "EU no thank you" outside parliament on Wednesday.

"We are here to remind our elected representatives that the country voted to leave. Get on with it," Nigel Birrell, a supporter of Brexit, told Reuters.

May has said she will trigger formal EU divorce talks by the end of March but the Supreme Court is due to consider a government appeal next month over whether parliament must first approve that move.

Another supporter of Brexit, Mo McDonald-Robertson, said outside parliament: "I think they are just putting up lots of obstacles at the moment."