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EU cuts forecasts for British economy as Brexit talks loom

While British economic growth is forecast to slump from 3.1 percent in 2014 to a projected 1.2 percent next year, EU growth is expected to go the other way, from 1.6 percent in 2014 to 1.8 percent in 2018.

By: AP | Brussels |
February 13, 2017 8:41:30 pm
uk trade, britain trade, UK, Brexit, UK Brexit, Britain, Britain Theresa May, Theresa May, Brexit EU, european union, EU brexit, latest news, latest world news British Prime Minister Theresa May  (AP Photo/Alastair Grant)

The European Union has a bleak forecast for the British economy in the wake of the Brexit vote but paints a more optimistic picture for the bloc as a whole. For Britain, “economic growth is projected to moderate in 2017 and weaken further in 2018,” largely coinciding with the period during which the UK is to negotiate its divorce terms with the 27 other EU nations.

While British economic growth is forecast to slump from 3.1 percent in 2014 to a projected 1.2 percent next year, EU growth is expected to go the other way, from 1.6 percent in 2014 to 1.8 percent in 2018. In its Winter Economic Forecast released Monday, the EU said the unclear intentions of US President Donald Trump heightened uncertainty for its projections.

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Beyond trans-Atlantic relations, the EU will also have to content with uncertainty from presidential elections in France and parliamentary polls in Germany and the Netherlands.

“With uncertainty at such high levels, it’s more important than ever that we use all policy tools to support growth,” said EU Financial Affairs Commissioner Pierre Moscovici, alluding to EU and national government support packages that have seen an increase since the days of strict austerity.

With political upheaval and support for right-wing populists brewing in many member states, Moscovici said that “we must ensure that its benefits are felt in all parts of the euro area and all segments of society.” Overall, the key forecasts were slightly up from November’s last report, boosted by good performances late in 2016 and early 2017.

“The European economy has proven resilient to the numerous shocks it has experienced over the past year,” said Moscovici. “Growth is holding up and unemployment and deficits are heading lower.”

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