uk economy growth

Productive Growth in UK Economy

This is the fourth annual British Business Bank report on Small Business Finance Markets, setting out the latest evidence on the ways in which finance markets support smaller business and help them contribute to improving productivity and growth in the UK economy.

Our understanding of smaller business finance markets, both in terms of demand for finance and the finance providers’ supply of finance, is essential to shaping our business plan and the design of our programmers and products. Macro-economic developments in 2017 have reinforced the need to ensure that small business have the finance they need to make a strong contribution to economic growth.

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UK Economy Has Continued To Grow

The UK economy has continued to grow over 2017 whilst employment rates have remained high and unemployment is at its lowest rate since the 1970s. In 2017, the ONS estimated the economy expanded by about 1.8% compared with the previous year, higher than the OBR’s Autumn forecast of 1.5%, but down from a rate of 1.9% in 2016, and the slowest pace of annual growth since 2012. The slowdown in UK GDP growth contrasts with a pick-up in other advanced economies. In the euro area, US, Canada and Japan, quarterly growth has been stronger than in the second half of 2016 and stronger than in the UK. Sterling’s fall has seen inaction pick up more rapidly in the UK than in the other major economies, contributing to weaker real growth.

The fall in the pound that followed the EU referendum has pushed up consumer price ination and squeezed households’ real incomes and spending whilst public spending cuts and political and Brexit-related uncertainties have also weighed on the economy. The OBR has now downgraded its growth forecasts for the medium-term, saying the UK economy would grow by just 1.4% in 2018, 1.3% in 2019 and 2020, and 1.5% in 2021. The growth urge is now in line with the Bank of England’s assessment.

Click here to download the full report.