The World Bank has upgraded its forecasts for UK growth over the next three years against a stronger global backdrop that will boost the British economy despite its weak start to the year.
Economists at the Bank expect the UK economy to grow by 1.7pc this year. This is only slightly below last year’s expansion of 1.8pc, and up from a forecast of 1.2pc in January.
This is only slightly below last year’s expansion of 1.8pc, and up from a forecast of 1.2pc in January.
Ahead of a UK general election this Thursday that will shape Britain’s future outside the European Union, growth for 2018 and 2019 was also upgraded to 1.5pc a year, up from previous projections of 1.3pc.
The revisions were driven by expectations of stronger growth in advanced and emerging economies, with a recovery in industrial activity and a rise in global trade expected to lift output around the world.
Franziska Ohnsorge, a lead economist at the World Bank, said the near-term upgrade was driven by “unexpectedly resilient” activity around the turn of the year.
She said the UK’s highly open economy meant it would be sensitive to developments in the global economy over the next few years, while a projected upturn in the eurozone was also expected to lift UK growth, “despite uncertainties related to Brexit discussions”.
An upturn in the US is expected to support growth in advanced economies, alongside stronger domestic demand in the eurozone and Japan and firming investment across the developed world.
The international body expects the global economy to expand by 2.7pc this year. This is unchanged from its January forecast and follows years of persistent downgrades amid disappointing growth.
Its forecasts for stronger growth in 2018 and 2019 of 2.9pc were also unchanged.
“Global growth is firming, contributing to an improvement in confidence,” the World Bank said in its twice-yearly healthcheck of the global economy.
Jim Yong Kim, the president of the World Bank, said it was “encouraging” that the global economy was “gaining firmer footing”, though he warned that the recovery was not entrenched and the threat of increased trade protectionism remained.
Dr Kim said: “With a fragile but real recovery now underway, countries should seize this moment to undertake institutional and market reforms that can attract private investment to help sustain growth in the long-term.”
The World Bank warned “policy uncertainty” surrounding US fiscal policy and Brexit negotiations posed the biggest risks to the outlook, which remained tilted to the downside.
“Negotiations around the exit of the United Kingdom from the European Union carry risks,” it said. “If the uncertainty persists, it could weigh on investor confidence and derail the ongoing recovery in growth.”