United Kingdom

Following a referendum in mid-2016, the UK government has started the process of exit from the European Union, aiming at broad agreement on the new economic relationship with the EU by March 2019. Sterling depreciated sharply after the referendum, pushing up inflation and depressing private consumption. Business investment growth has been constrained by continued uncertainty about the future trade regime. UK growth moderated in 2017 despite significant monetary policy accommodation and strong trading partner growth, and is expected to remain subdued in the near term. Over the medium term, growth prospects will depend on the extent of recovery of labor productivity, which has been very low since the financial crisis.