If you weren't worried enough today, the European Commission has just cut UK growth expectations for 2017 by almost half

Billy Bambrough
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Business investment in the UK is expected to
Business investment in the UK is expected to "decline sharply" (Source: Getty)

The European Commission has today pointed the finger of blame squarely at the UK's vote to quit the European Union for its downgrade of European and UK growth.

According to the EC, UK GDP is now expected to come in at 1.9 per cent this year, one per cent next year, and 1.2 per cent in 2018.

You can watch the ECs handy video below

Expectations for 2017 growth are now almost half of what they were before the UK voted to quit the European Union in June.

Read more: The UK trade deficit widened in September

The EC also said it expects business investment to "decline sharply" throughout 2017 and fall by 2.2 per cent for the year.

The EC said:

Risks to the forecast have risen in recent months and are clearly tilted to the downside, including as a result of the UK ‘leave' vote, which has raised uncertainty and can be seen as an indicator of heightened policy risks in the current volatile political environment.

Despite the UK taking the brunt of the warning over growth, the commission also cited risks outside of Europe, such as uncertain economic trends in China and the risk of aggravating geopolitical conflicts, as weighing on growth.

In Europe

Economic growth in Europe was also revised down. The EC now expects GDP growth in the euro area of 1.7 per cent in 2016, 1.5 per cent in 2017 and 1.7 per cent in 2018. In the Spring the EC said it expected 1.6 per cent growth for this year, 1.8 per cent for next year.

In its first look ahead to 2018 the commission said it expected growth of 1.8 per cent.

Pierre Moscovici, commissioner for economic and financial affairs, taxation and customs, said:

European growth will hold up in 2017 against a more challenging backdrop than in the spring. The pace of job creation, boosted by recent reforms in many countries, decreasing public deficits in the euro area, a pick-up in investment and more dynamic EU-intra trade are particularly encouraging.

In these volatile and uncertain times, no effort must be spared to safeguard and strengthen this recovery – and ensure that all sections of society feel its benefits.

Inflation to pick up

The EC reported that low inflation in the euro area in the first half of the year was down to falling oil prices, but this is expected to pick up in the third quarter.

The impact from past price decreases is thought to have already begun to wear off.

The commission is expecting inflation to now climb moderately above one per cent, as oil prices are assumed to rise.

Read more: Britain is embracing free trade just as the world turns to protectionism

Core inflation, which excludes volatile energy and food prices, is expected to rise gradually amid higher wage growth and a further narrowing of the output gap.

Overall, inflation in the euro area is expected to rise from 0.3 per cent in 2016 to 1.4 per cent in both 2017 and 2018.

In the EU, inflation is forecast to rise from 0.3 per cent this year to 1.6 per cent in 2017 and 1.7 per cent in 2018.

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