The British Chambers of Commerce nudged up its forecast for economic growth next year but downgraded the outlook for 2018 due to inflation pressures and ongoing uncertainty as Britain prepares to leave the European Union, it said.

The BCC modestly revised up its expectations for gross domestic product growth to 1.1 per cent for 2017 from one per cent after a stronger-than-expected economic performance following June’s vote to quit the EU which means the economy is likely to grow 2.1 per cent this year, roughly its long-run average.

However, the business group said it expected the current economic momentum to slow over the next two years and downgraded its GDP forecast for 2018 to 1.4 per cent from 1.8 per cent, as Britain continues its divorce from the EU. The BCC’s forecast is exactly in line with the consensus among private-sector economists polled by Reuters last week, and their economic analysis is similar.

While some firms see significant opportunities over the coming months, many others now see increasing uncertainty

Weaker economic activity and an erosion of real wage growth triggered by sterling’s post-referendum slide was expected to curb household consumption and business investment, the BCC said.

Inflation is expected to breach the Bank of England’s two per cent target next year, with a forecast of 2.1 per cent in 2017 and 2.4 per cent in 2018, the BCC said.

“In the absence of a clear road ahead, many companies have been adopting a ‘business as usual’ approach in the months since the referendum, which has kept conditions buoyant this year and prevented a sharp slowdown in growth,” BCC economist Suren Thiru said.

“While some firms see significant opportunities over the coming months, many others now see increasing uncertainty, which is weighing on their investment expectations and confidence.”

The BCC also said it expects business investment to fall by 0.8 per cent in 2016, 2.1 per cent in 2017 and 0.3 per cent in 2018. This represented a less steep decline for 2016 and 2017, but a sharper fall for 2018.

The business group also expects export growth to slow as it believed the benefits of a weaker pound had been overstated.

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