Last month inflation was up to 1.6%, the highest since June 2014, and it is expected to rise to 2% throughout 2017 because of the rising cost of imported goods. The Bank of England originally forecast 1.4% growth back in November last year, but the growth outlook for 2017 has been upgraded to a solid 2% because of higher spending and more investment than expected since Brexit.
The colossal slowdown in consumer spending that many people were expecting in the aftermath of Brexit had not happened, and so growth throughout the UK has remained strong. The Bank of England also credits growth in the USA and Europe with its more positive predictions.
The Bank of England is, however, being reserved in its predictions for 2018 when the effects of Brexit may be seen more widely, with a projected growth of 1.6%. This represents a slight slowdown from this year and, paired with an expected inflation rate of 2.7%, means times are sure to get somewhat tougher as the years go on. I am sure this prediction will change throughout 2017 as nobody can be certain about how and when the markets will react, or to what degree.
The Bank of England has said that they will watch closely to ensure the situation doesn’t become unmanageable and I certainly don’t envy them their job. They probably have the most difficult balancing act in the world, and the twists and turns of things such as Brexit only make keeping the balls in the air that much more difficult.