Brexit to lower economic growth by 2.4%

Today’s OBR forecast, announced in the Autumn Statement, is for growth to be 2.1% in 2016; higher than forecast in March.

In 2017 the OBR forecasts growth to slow to 1.4%, which they attribute to lower investment and weaker consumer demand, driven, respectively, by greater uncertainty and by higher inflation resulting from sterling depreciation.

As the effects of uncertainty diminish, the OBR forecasts growth recovering to 1.7% in 2018, 2.1% in 2019 and 2020, and 2% in 2021.

The Chancellor also confirmed that due to "the uncertainty facing the economy, and in the face of slower growth forecasts, we no longer seek to deliver a surplus in 2019-20".

Philip Hammond commented: "That’s slower, of course, than we would wish, but still equivalent to the IMF’s forecast for Germany, and higher than the forecast for growth in many of our European neighbours, including France and Italy.

"While the OBR is clear that it cannot predict the deal the UK will strike with the EU, its current view is that the referendum decision means that potential growth over the forecast period is 2.4 percentage points lower than would otherwise have been the case.

"The OBR acknowledges that there is a higher degree of uncertainty around these forecasts than usual. Despite slower growth, the UK labour market is forecast to remain robust."