projected UK GDP growth in 2018
projected UK consumer price inflation in 2018
projected UK consumer spending growth in 2018
projected share of spending on housing and utilities in 2030
UK economic growth slowed in 2017 as inflation rose sharply, squeezing household spending power.
In our main scenario, we project UK growth to remain modest at around 1.5% in 2018 and 1.6% in 2019. This is due to continued subdued real consumer spending growth (see chart opposite) and the drag on business investment from ongoing economic and political uncertainty relating to the outcome of the Brexit negotiations.
The stronger global and Eurozone economies, and the competitive value of the pound particularly against the euro, should also boost exports, however, which will offer some support for overall UK GDP growth.
Service sector growth should remain modest but positive in 2018-19, while manufacturing retains momentum after ending 2017 strongly. But the construction sector has fallen back due to the weakness of commercial property investment and this looks set to continue this year.
London has outperformed other UK regions for most of the past 20 years, but its growth rate looks set to fall back to close to the UK average in 2018-19. The North and Midlands are benefitting from stronger manufacturing growth recently.
The Bank of England could raise interest rates once or twice this year, though the pace of increase will remain limited and gradual.
Download the full report below for our detailed analysis and use our data tool to explore growth trends for your region or industry sector.
We project households will spend over 30% of their budget on housing and utilities by 2030, up from around 27% in 2017. Spending on financial services and personal care will also tend to increase relatively rapidly over time, while the share of total spending on transport, food and clothing will tend to decline in the long run.
Automation could have a major impact on retail jobs in the long run, but will also bring benefits to consumers in lower prices. This will allow consumers to increase their real spending levels, potentially creating new jobs in less automatable services sectors such as health and personal care. Emerging technologies like artificial intelligence (AI) could also bring great competitive advantage to businesses that deploy them effectively.
London has grown significantly faster than other UK regions for most of the past two decades, but recently there have been signs from both the labour and housing markets that London’s relative performance has been less strong.
We expect this to continue in 2018-19, with London growing at close to the UK average rate.
As manufacturing has bounced back recently on the back of a stronger global economy and a more competitive value of the pound, this has helped parts of the UK with stronger industrial bases in the North and the Midlands.
Select a region or industry sector in the interactive data tool below to explore past growth trends further.