The International Monetary Fund (IMF) released its outlook for the U.K. economy Wednesday, projecting GDP growth for 2018 at 1.5 percent — down from 1.6 percent in 2017 — citing Brexit uncertainty as the main weight on growth.
"Despite a strong recovery in global growth and strong macroeconomic policies, the impact of the decision to exit the European Union has weighed on private domestic demand," the IMF said in its concluding statement of the 2017 Article IV mission, an annual health-check on the country's economy.
"Our forecast for 2018 is 1.5 percent as uncertainty about the shape of Brexit persists, most likely, and inflation remains above target," IMF Managing Director Christine Lagarde said in London Wednesday morning. "The less uncertainty, the greater the upside risk — the more uncertainty, the more that forecast is at risk."
Amid largely uniform global growth, "The U.K. economy is losing out as a result of the (Brexit) decision — higher inflation, pressure on wages, delayed investment simply as a result of the uncertainty," Lagarde added. The IMF in September forecast global growth for 2017 and 2018 at 3.6 percent and. 3.7 percent, respectively.
Recent progress in Brexit talks was welcome, the Fund noted, but added that there was a very long list of tasks ahead with a very ambitious time frame, including reaching a trade deal with the EU, negotiating new arrangements with some 60 countries, boosting human and IT resources in customs and other areas, and translating thousands of pages of EU law into U.K. domestic statute.