EY: UK set for “short, shallow recession” as house prices hit

Ryan Fowler

July 18, 2016

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.

The time is nigh for a rate rise

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.

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