Fitch expects UK economy to expand by 1.3% next year

"Ensuring the medium- to long-term sustainability of the UK's public finances appears more challenging following the November Budget and the Office for Budget Responsibility's (OBR) reduction to its economic growth forecasts," Fitch Ratings argued in a recent report.

Key quotes

The OBR now expects real GDP growth to average 1.4% over the four years to 2020, down from 1.8% in its March forecasts, before picking up slightly to 1.5% in 2021. 

We expect the UK economy to expand by 1.3% next year, but are more optimistic than the OBR for 2019. 

The OBR still expects the public sector deficit to fall, but probably not fast enough to meet the government's target of a balanced budget by the middle of the next decade.

Our deficit projections from our October rating review, which do not incorporate the latest policy announcements, imply general government debt declining gradually as a share of GDP from a peak of 88.3% of GDP in 2016 to 85.7% of GDP by 2019.

This would still leave the UK with one of the highest public debt ratios among highly rated sovereigns.