The British Chambers of Commerce has cut its economic outlook for the next two years as the business organisation sees inflation rising faster than pay for the next two years.
UK inflation has held at a five-year high of 3% since September, pushed up by the fall in the sterling since June 2016’s EU referendum. During this time, wages have failed to keep pace.
The British Chambers of Commerce, in a quarterly update to its economic outlook, said it expected this to persist throughout 2018.
“Continued uncertainty over Brexit and the burden of upfront cost pressures facing businesses is likely to stifle business investment, while falling real wage growth is expected to continue to weigh on consumer spending,” BCC economist Suren Thiru said.
The BCC cut its forecasts for 2017, 2018 and 2019, seeing growth of 1.5% this year, slowing to 1.1% in 2018 and recovering only slightly to 1.3% in 2019.
This is slightly below the average for economists polled by Reuters, who expect growth of 1.3% next year and 1.5% in 2019, when Britain is due to leave the European Union.