The UK is set to fall into a “short, shallow recession” around the turn of the year as Brexit hits house prices, jobs and spending, EY Item Club has warned.
It said it expects house prices to drop by a whopping 4% as there is “nothing to support the housing market in this situation”.
It has slashed its 2017 growth estimate to 0.4% from 2.6%, and warned that Britain’s economy will suffer permanent damage following the decision to exit the European Union.
It has also predicted that the Bank of England will cut interest rates to zero by the end of the year.
In said: “There are likely to be severe confidence effects on spending, only partially cushioned by a fall in the pound,” the report is to say. “We would expect a permanent reduction in the level of UK output and productivity.”
Exports represent the only positive in the predictions from EY with a projected increase of 3.4% expected next year as a weak pound makes British goods more competitive internationally.