There was mixed news for Britain’s economy as the Organisation for Economic Co-operation and Development revised up its forecast for UK growth for this year but was gloomier about next year.
It believes rising inflation will mean British consumers will spend less and businesses will put investment on hold due to uncertainty over Brexit.
The OECD is slightly more optimistic than the International Monetary Fund with its projections for 2017 seeing GDP expanding at 1.6 percent, revised up from its 1.2 percent forecast of last November. The IMF’s forecast is for 1.5 percent growth.
For 2018 the OECD’s growth prediction is unchanged at 1.0 percent against the IMF’s 1.4 percent.
Signs of slowdown
A shopping slowdown by cautious consumers is already evident.
Over the three month period to the end of February the British Retail Consortium recorded the first annual drop in non-food sales in over five years.
Britons are having to spend more on food, fuel and other essentials as inflation picks up. It hit 1.8 percent in January and many economists think it could reach 3.0 percent this year.
Rachel Lund, head of insight and analytics with the British Retail Consortium, gave her conclusions: “In terms of what that means for the UK economy, it shows that consumer spending is starting to slow and that’s something we expected to happen. However, it’s a little bit of a concern given that consumer spending is what has propped up UK GDP growth over the last year.”
Today in retail: Non-food spend slump settles in https://t.co/ho62Q9R2je (£)— Retail Week (@RetailWeek) 7 de março de 2017
Credit card company Barclaycard reported a similar trend as it said discretionary purchases slowed for a fifth month.
Since last June’s Brexit vote an expected slowdown did not materialise as Briton’s continued hitting the shops, even using their savings to carry on spending.
That may be over with the increasing signs of pressure on UK households’ spending power.