UK: Recession looking increasingly unlikely - Wells Fargo

Analysts from Wells Fargo, don’t see a recession in the outlook of the United Kingdom but they still look for investment to weaken. 

Key Quotes: 

“When British voters decided to leave the EU via the Brexit referendum at the end of June it seemed to us that a modest recession was in the cards. After all, the economies of the United Kingdom and the other 27 members of the EU are extensively intertwined and a British decision to quit the EU means that this entire economic relationship needs to be redefined over the next few years.”

“Given the uncertainty that this process entails, we thought it reasonable in the immediate aftermath of the referendum that some businesses would mothball at least some of their capex plans until greater clarity emerged regarding the future U.K.-EU economic relationship.”

“Five months later there are few indications of an imminent recession in the United Kingdom. Consequently, we have bowed to the reality of the incoming economic data and have removed recession from our British economic outlook. We still look for investment to weaken somewhat in the next few quarters, but a sharp enough downturn in capital spending to pull the entire economy into recession is looking increasingly unlikely. We currently forecast that real GDP in the United Kingdom will grow 1.3 percent in 2017 and 2.1 percent in 2018.”