The EU referendum result has led to a significant reduction in the short-term economic outlook for cities across the UK, according to the UK Powerhouse tracker produced by the Centre for Economic and Business Research and Irwin Mitchell.
Although economic data remains fairly solid at present – retail sales are rising, unemployment is low and the economy performed respectably in the first half of the year – the real challenges lie in 2017.
For now, consumers across the UK are benefiting from an environment of low inflation and rising earnings, but price growth could pick up rapidly over the coming months as the weakness of sterling feeds through into higher import costs. Next year could see a squeeze on household spending power which, combined with subdued business investment, will grind the economy to near-zero growth.
While London has been leading the UK out of the global financial crisis, the latest UK Powerhouse forecasts show that the capital’s economy is set to be hit hardest of all major cities in the short term. In the first quarter of 2017, we expect annual economic growth in London to stand at just 0.4%, compared with our…