Jaspreet Sehmi, Senior Economist, Dun & Bradstreet
“In its first set of projections since the UK referendum, the IMF downgraded its forecasts for global, Eurozone and UK growth and stated that the UK will be the worst affected of all the advanced economies. However, in the event the IMF has only downgraded its UK growth estimate for 2016 by 0.2 percentage points to 1.7%. This view seems to be based on the optimistic assumption that the UK and EU will broadly maintain their existing trade and financial relationships, as well as the resilience shown by the financial markets in recent weeks.
“At Dun & Bradstreet, we anticipate that the UK economy is now passing through the eye of the storm, and that the current financial market respite will prove temporary. With a new government at the helm trying to navigate the UK economy through previously unexplored territory, the journey ahead remains long and uncertain. We expect the UK to enter a technical recession at some point between the second half of this year and the first half of 2017. Businesses are facing increased uncertainty, and anecdotal evidence suggests that firms are already scaling back investment and hiring plans. Our country risk rating for the UK was downgraded from DB2a to DB2c immediately after the vote, and we advise businesses to continue to monitor developments closely.”