IMF who? Analysts predict UK second quarter GDP to nose up... but say it could have been so much better

 
Oliver Gill
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Ian Poulter of England poses in his Unio
City analysts said the political fallout of the Brexit vote is hampering the UK economy (Source: Getty)

Economic growth figures released on Wednesday are set to show the UK is coping well despite the political challenges facing the country.

Second quarter gross domestic product (GDP) is expected to rise to 0.3 per cent from 0.2 per cent in the first three months of the year.

“Despite the political chaos, the UK economy continues to remain resilient,” said Berenberg senior UK economist, Kallum Pickering, who predicted second quarter GDP will be “at least” 0.3 per cent.

He added: “The economy is still coping reasonably well with the enormous political risks hanging over the UK.”

Read more: IMF downgrades UK growth forecast

Analysts from Daiwa Markets agree that a 0.3 per cent rise is on the cards adding: “We would not completely reject the possibility of a higher reading, which could potentially reinvigorate speculation of monetary policy tightening over the coming months.”

Investec concurred with Berenberg and Daiwa. But analysts added: “Growth likely driven by expansion in the services sector, whilst the construction and industrial sectors contract.”

Meanwhile, Pickering said UK economic performance has been hamstrung by the Brexit vote and ensuing political fallout.

He said:

The uncertainty stemming from Brexit is leading to caution in all areas of spending and policy that have long-term implications. The UK would probably be growing at 2.5 per cent or above this year were it not for Brexit, with strong gains in real wages and more business investment.

“Instead, we forecast a modest expansion of 1.7 per cent this year and 1.6 per cent next year.”

Earlier today, the International Monetary Fund downgraded UK's annual growth prospects from two per cent to 1.7 per cent, citing "weaker-than-expected activity" in the first quarter of 2017.

Read more: Editor's Notes: Politicians should ditch the lies to win back trust

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