Economic growth has stalled

Key points

• Economic growth has stalled and there is around a one-in-four chance that the economy is already in a technical recession.
• The outlook beyond October, when the United Kingdom is due to leave the European Union, is very murky indeed with the possibility of a severe downturn in the event of a disorderly no-deal Brexit.
• On the assumption that a no-deal Brexit is avoided, the economy is forecast to grow at around 1 per cent in 2019 and 2020 as uncertainty continues to hold back investment and productivity growth remains weak.
• On the assumption of an orderly no-deal Brexit, the economy is forecast to stagnate, before starting to grow again in 2021.
• Some loosening of the public purse appears inevitable and we expect public sector borrowing to rise above 2 per cent of GDP, with the possibility of substantial over-runs of the government’s fiscal objectives in the event of a no-deal Brexit.