Economists from Warwick Business School continue to find little evidence in the data to suggest that Brexit will lead to disappointing economic growth in 2017, forecasting GDP growth will likely be between 2 and 3 per cent.
These projection were made by using the second estimate of GDP released today by the Office for National Statistics (ONS) and in contrast to the recent forecasts from the Office for Budget Responsibility (OBR) and the Bank of England. The Warwick Business School Forecasting System (WBSFS) crunched numbers through its econometric models to produce a “judgement-free” macroeconomic forecasts for UK GDP growth and CPI inflation. These forecasts are updated each quarter to reflect the latest data.
Its latest data suggests economic growth will not slow or halt in 2017. However, Brexit, and the uncertainty it has introduced, may well alter historical patterns in the data.
Professor Ana Galvao of the Economic Modelling and Forecasting (EMF) Group at WBS believes that since the referendum, the OBR and Bank of England have both become more pessimistic about prospects for GDP growth in the UK in 2017.
“In contrast, the WBS benchmark forecasts suggest a 75 per cent chance that growth in 2017 will in fact exceed the OBR’s and Bank’s latest forecasts. But the WBS forecasts are produced under the assumption that historical relationships and patterns in macroeconomic data continue to hold post-Brexit. They may well break down,” she said.
Professor James Mitchell, of the EMF Group at WBS, added: “What is especially uncertain is how the apparent increase in macroeconomic uncertainty, post-referendum, will affect relationships between official macroeconomic time-series. But what the WBS forecasting system does reveal is that while a change for the worse in terms of future economic growth may happen, recent economic data provide no clear indication that this will happen in 2017.”