The European Union on Wednesday nearly halved its economic growth outlook for Britain in 2017 due to the impact of the Brexit vote to leave the bloc. "Growth is projected to almost halve in 2017, to 1.0 percent, (from 1.9 percent in 2016) reflecting the impact of heightened uncertainty following the referendum and its impact on business confidence and broader economic conditions," the EU said in its autumn economic forecasts.
British economic growth is however expected to edge up slightly in 2018 to 1.2 percent because of a rise in exports even as domestic demand remains low, the EU said. "Uncertainty is likely to remain high as negotiations on the future relationship between the UK and EU continue, impeding the extent of the rise in growth in 2018," it said.
Britain voted to leave the EU in a referendum on June 23. Prime Minister Theresa May has said she will formally trigger the two-year divorce process by the end of March 2017 but Brussels and London face gruelling negotiations on a future trade deal.
The EU forecast warned that the uncertainty was also likely to harm the wider economy of the 19-nation eurozone which had so far "shrugged off" the impact of Brexit. "What has already been observed is a sharp increase in uncertainty, which is expected to hamper economic dynamics primarily in the UK but also in the EU," it said.