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19 September 2023
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Economic growth is expected to slow from 2.3% in 2015 to 2.0%. This is one of the key findings from the Q2 2016 ICAEW Economic Forecast.
The ICAEW Economic Forecast is based on the views of the people running UK plc; ICAEW Chartered Accountants working in businesses of all types, across every economic sector and in all regions of the UK, surveyed through the quarterly ICAEW/Grant Thornton UK Business Confidence Monitor (BCM).
The key findings this quarter are:
Economic growth is expected to slow from 2.3% in 2015 to 2.0% in 2016
We continue to forecast slower growth this year amid turbulence in global financial markets, evidence of softer global growth and the increased uncertainty ahead of the upcoming EU referendum.
Business investment growth is forecast to slow to 4.1% in 2016 (from 5.2% in 2015)
The financial position of the corporate sector remains very strong, as do rates of return in the service sector. But the decline in business confidence seems likely to temper capital spending.
The labour market looks set to stabilise this year, with employment growth easing as spare labour becomes increasingly scarce
ICAEW expects employment growth to slow, to 1.1% in 2016 from 1.5% in 2015, with the unemployment rate forecast to flatten, averaging 5.0% in 2016.
Even though the labour market has tightened, pay growth is set to slow modestly.
The introduction of the National Living Wage will offer some support to low income workers, but BCM survey evidence points to pay growth of 2.1% in 2016, slightly slower than 2015.
The Bank of England is likely to keep the Bank Rate at 0.5% throughout 2016.
The continued low price of oil points to inflation remaining lower for longer, with the Monetary Policy Committee (MPC) unlikely to raise rates until wage growth strengthens. The MPC is likely to keep rates at their historic low until the second quarter of 2017 in our baseline forecast.
You can find out more about business confidence in Northern England at our regular ICAEW Business Confidence Monitor (BCM) Briefing breakfast and lunches.We hold these regularly to discuss the findings of the latest quarterly ICAEW/Grant Thornton UK Business Confidence Monitor (BCM) report.
Our next breakfast briefing is in Newcastle with the Bank of England on 22 June 2016 (more details at BCM Breakfast with Bank of England) and in Middlesbrough on 30 September 2016 (more details at BCM Lunch with Bank of England)
Find details about these and future BCM briefings in our events centre at norsca.co.uk/events
You can read more about the findings of the Q2 2016 ICAEW Economic Forecast on icaew.com
You can also download the Q2 2016 ICAEW Economic Forecast.
ICAEW continues to work with Oxford Economics to issue quarterly reports which provide useful insight and timely intelligence for finance professionals and their clients. You can find out more about ICAEW Economic Insight at icaew.com
Northern Society of Chartered Accountants (NorSCA) represents ICAEW members working in business and the finance profession across the North East of England, Teesside, Northern Yorkshire and Cumbria. We have been assisting businesses in the north of England and producing chartered accountants for over 130 years.
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