Economists at KPMG have slashed their expectations for the UK’s economic growth and warned of a slowdown due to Brexit uncertainty and global headwinds.
The professional services firm has downgraded its Gross Domestic Product (GDP) forecast for 2020 by 0.2% to 1.3%, in its latest quarterly outlook.
It is expected that the rate will decline from 1.4% growth in 2019, as the boost from stockpiling recorded earlier this year unwinds.
Meanwhile, financial and professional services are expected to be held back by the continuing uncertainty over what Brexit will look like, following the postponement of the deadline to October.
Yael Selfin, chief economist at KPMG UK, said headwinds would also come from the slowing state of the global economy.
“Recent weeks saw the gathering of clouds over the global horizon, with growing talk of a possible recession and a change in tune by major central banks as they gather their depleted arsenal to the rescue,” she said.
“The UK now has to consider the global backdrop a headwind.”
Consumer spending, which has consistently outperformed wider economic growth, is likely to continue being a driving force for the economy as a tight labour market and rising pay support household finances.
But KPMG predicted it would slow to 1.2% growth in 2020, compared to 1.8% last year and an estimated 1.5% in 2019.
It follows fresh predictions from EY earlier this week, which also indicated slowing consumer spending this year with predicted growth of 1.6%.
Meanwhile, business investment is set to keep sliding, despite a boost earlier this year as a result of Brexit preparations.
KPMG has cut its expectations for next year’s growth to 1.1%, as firms scale back spending. This is a downgrade from the most recent estimate of 1.6%.
Ms Selfin said: “In addition to Brexit, the UK economy faces two urgent challenges it needs to address: low productivity and inequality of opportunity.
“They represent a ticking time bomb which, if not defused early, will relegate the UK to the bottom of the league, with long-term mediocre growth and dwindling prospects.”