United Kingdom slashes 2019 economic growth forecast: Budget

Philip Hammond. Photograph:( AFP )

AFP London, UK Mar 13, 2019, 08.15 PM (IST)

Britain on Wednesday slashed its 2019 economic growth forecast, as finance minister Philip Hammond said lifting Brexit's "cloud of uncertainty" was parliament's "most urgent task".

The UK economy is forecast to grow by 1.2 percent this year, sharply down on the government's prediction of 1.6 percent in October, Hammond said as he gave a budget update hours before MPs vote on whether to allow the country to leave the EU with no deal.

Analysts expect parliament instead to favor delaying Britain's departure beyond the March 29 exit date, in a further vote due Thursday.

This is after parliament on Tuesday overwhelmingly rejected the country's draft Brexit divorce agreement with Brussels.

"I am acutely conscious that the House (of Commons) has other pressing matters on its mind today," Chancellor of the Exchequer Hammond told MPs after announcing that British gross domestic product growth would be much lower than expected this year, with the UK economy hit also by China's slowdown and trade war tensions.

"Last night's vote leaves a cloud of uncertainty hanging over our economy and... our most urgent task in this House is to lift that uncertainty," Hammond said in his budget address.

"Leaving with 'no deal' would mean a significant disruption in the short and medium term, and a smaller, less prosperous economy in the long term than if we leave with a deal -- higher unemployment, lower wages, higher prices in the shops. 

"That is not what the British people voted for in June 2016" to leave the EU, the chancellor added.

Hammond added that the UK economy was expected to grow by 1.4 percent in 2020, unchanged from the government's October forecast.

Story highlights

The UK economy is forecast to grow by 1.2 percent this year, sharply down on the government's prediction of 1.6 percent in October, Finance Minister Philip Hammond said Wednesday as he gave a budget update hours before MPs vote on whether to allow the country to leave the EU with no deal.