growth in the UK itself is expected to weaken
Economic growth in the UK itself is expected to weaken. For
example, purchasing managers‘ indices for the manufacturing
sector and for services have already fallen sharply, signalling a
contraction to levels of below 50.
Our Economic Research colleagues have revised down their forecasts for British growth – to
1. 6% in 2016 (previously: 1. 9%) and 0. 5% in 2017 (2. 2%) . Quite
a few companies will review their investment plans, and the ex-
pected sharp downturn in investment could already lead to a sea-
sonally adjusted decline in price-adjusted GDP in the third quarter
of 2016.
Conversely, sentiment in German industry – which is heavily
dependent on the performance of the global economy which Com-
merzbank expects to grow faster in 2017 than in 2016 – has not
deteriorated sharply. The ifo business climate index declined
slightly in July and August after the Brexit decision to the level of
March/April 2016.
German industry will feel the effects of expected
lower British demand, and German exports to the Ukare likelyto
decline.
EU Forecast
euf:b.a18b:192/nws-01