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PwC: UK Economic Outlook

—17 July 2018
—Prospects for the housing market and the impact of AI on jobs

A regular PwC report covering outlook for economic growth at the national, sectoral and regional level, as well as prospects for inflation, earnings and interest rates. This edition also looks in detail at prospects for the housing market and takes a longer term view of the potential impact on AI and related technologies in both creating and displacing jobs.


Summary

In the main scenario, PwC project UK growth to remain modest at around 1.3% in 2018 and 1.6% in 2019. This is due to continued subdued real consumer spending growth (see chart below) and the drag on business investment from ongoing economic and political uncertainty relating to the outcome of the Brexit negotiations.

The stronger global economy, and the competitive value of the pound, have boosted UK exports and inbound tourism, offering some support for overall UK GDP growth that should continue through 2018. However, the Eurozone economy has slowed recently and any further escalation of international trade tensions could dampen global growth in 2019 and beyond.

Service sector growth should remain modest but positive in 2018-19, while manufacturing also retains some positive momentum despite a slowdown in early 2018. But the construction sector has fallen back due to the weakness of commercial property investment and this looks set to continue.

London has grown significantly faster than other UK regions for most of the past three decades, but recently there have been signs from both the labour and housing markets that London’s relative performance has been less strong. PwC therefore expect London to grow at only slightly above the UK average rate in 2018-19, with limited variations in growth across regions over this period.


Download the full report here for detailed analysis, including special features on housing and the potential impact of AI and related technologies on jobs.

Click here for data tool to explore trends and prospects for house prices in your region.

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