The British economy will start to see deeper impacts from the Brexit vote over the next six months with rising inflation and falling business investment, the consultancy firm Ernest & Young said Monday.
So far the U.K. has managed to resist economic shocks from the decision to leave the European Union, but expectations of falls in consumer spending, higher inflation and lower levels of business investment paint a more dramatic outlook for the upcoming months and years.
"We think over the next six months or so we will start to see the after effects of that vote coming to play," Martin Beck, senior economic advisor to the EY ITEM Club, told CNBC Monday.
"The falling pound is going to push import prices up, will raise inflation, that will depress consumers' purchasing power and as Brexit becomes more of a hard reality, the business investment is likely to suffer because of the uncertainty around what will be the U.K.'s trade future relationships with the EU."
According to EY's latest autumn forecasts, the U.K. should grow at a pace of 1.9 percent in 2016, but its GDP (gross domestic product) should reach only 0.8 percent in 2017. It is expected that consumer spending will be significantly hit by the Brexit vote, with a forecast growth of 2.5 percent for this year to 0.5 percent in 2017.