EY, one of the largest accountancy firms in the UK has reduced its forecast for the UK economy, and warned there are likely to be “severe” confidence effects for business spending.
EY revised its expectations for UK GDP growth this year down from 2.3% to 1.9% as part of an after effect after Brexit (see our PDF on Brexit here).
For 2017, it lowered its growth forecast from 2.6% to 0.4%.
In the run-up to the EU referendum several economic organisations warned a vote to leave could hit the UK’s economic growth.
The Organisation for Economic Co-Operation and Development, and a PwC report for the Confederation of British Industry, predicted a fall of between 3-5%.
However, EY said the weaker pound was a “silver lining” that should cushion the economy against some of the adverse effects of Brexit uncertainty and could boost UK exports.
It comes as a new report shows optimism among finance chiefs at top UK companies is lower following the EU referendum than it was after the collapse of Lehman brothers in 2008, which was the catalyst for the financial crisis.
More than 80% at Accountancy firm Deloitte said they expected to cut down on spending and slow hiring plans.
“Sterling has fallen faster but UK equities have proved more resilient. Consumer confidence in July recorded its sharpest monthly fall in almost 22 years, but it remains much stronger than it was post-Lehman.”
Recent research from recruitment site Reed.co.uk shows the job market remains positive despite these fears.
In the weeks following the referendum the number of jobs advertised was up 8% from in comparison to last year.
And 83% of companies surveyed by the site since the vote said they would not be freezing recruitment.
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