The British Chambers of Commerce downgraded its growth projections for the U.K., citing weak consumer spending and a large reduction in investment.
Despite issues surrounding the Brexit, the U.K. is expected to skirt with, but avoid, recession, the business lobby said in its economic forecast released Monday.
The BCC forecasts the economy to grow 1.8 percent this year instead of 2.2 percent. The sequential growth in the third and fourth quarters of 2016 is forecast to slow down to 0.1 percent each.
The projection for 2017 was trimmed to 1 percent from 2.3 percent. If the forecast for 2017 is realized, it would be the weakest rate of growth since 2009, the lobby noted.
The 2018 outlook was downgraded to 1.8 percent from 2.4 percent.
The downgrade indicates that the U.K. economy will be GBP 43.8 billion smaller at the end of the forecast period than previously predicted.
The post-referendum slide in sterling is expected to help improve the net trade position. Nonetheless, weaker consumer spending and a fall in investment will only be partly offset by a stronger contribution from net trade, the lobby added.
Services and consumer spending are forecast to be the key growth drivers of the UK economy through the forecast period.
The BCC expects a further reduction in interest rates by the end of the year.
“The downgrades to our growth forecast confirm that the UK economy is set to enter a turbulent period, with growth expected to weaken materially in the near term,” Suren Thiru, BCC head of economics, said.