EC expects UK's 2017 growth to be faster than feared
Published 14/02/2017 | 02:30
The European Commission has revised up its growth forecast for the UK economy this year from its last estimate, which was as recent as November.
That suggests it believes the impact of the Brexit vote will not be as serious as it thought.
It said the British economy would grow by 1.5pc this year, up from 1pc previously.
The Bank of England (BoE) also revised up its forecasts this month as it kept interest rates at a record low. Both the BoE and the commission predict that expansion will slow in 2017 as consumer spending weakens and inflation speeds up.
The Commission's estimate for next year remains unchanged at 1.2pc, but it still believes growth will soften, even if it is not as quick as earlier thought.
"Despite resilience in the second half of 2016, economic growth is projected to moderate in 2017 and weaken further in 2018," the Commission said.
Economic growth in Ireland is projected to rise by 3.4pc this year, slowing to 3.3pc in 2018.
"GDP growth is projected to remain firm over the forecast horizon but to gradually decelerate amid heightened risks and an uncertain global backdrop," the Commission said. "Domestic demand is expected to remain the main driver of the economy, supported by the improving labour market."
The Commission warned that risks heightened last year, including uncertainties related to the UK's Brexit vote and future US tax and trade policies.
"Adverse news could negatively affect consumer confidence and economic activity," the Commission said. "The future evolution of the activities of multinationals remains uncertain and could impact GDP growth in both directions."