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NIESR sees stable growth in three months to Nov, consumer slowdown ahead
December 7, 2016 / 3:03 PM / 9 months ago

NIESR sees stable growth in three months to Nov, consumer slowdown ahead

LONDON, Dec 7 (Reuters) - British economic growth probably held stable in the three months to November but is likely to slow as consumers feel the pinch of rising prices after the Brexit hit to the pound, a think tank said on Wednesday.

Robust consumer spending has helped propel Britain’s services sector and the overall economy since voters decided to the leave the European Union in June.

“Looking ahead, we do not expect such buoyant consumer spending growth to persist,” Rebecca Piggott, a research fellow at the National Institute of Economic and Social Research

think tank (NIESR), said.

“Sterling’s pronounced depreciation this year is expected to pass through to the consumer prices throughout the course of 2017 and 2018, eroding the purchasing power of households substantially,” she said.

The Bank of England has predicted quarterly economic growth of 0.4 percent in the October-December period. It expects growth in 2017 to slow to a yearly pace of 1.4 percent from 2.2 percent in 2016.

NIESR has previously said it expects inflation to reach 3.8 percent by the end of next year, more than a percentage point higher than predicted by the BoE.

Earlier on Wednesday, the Office for National Statistics said British industrial output suffered its biggest monthly drop in more than four years in October, hit by a shutdown at the country’s largest oilfield and an unexpected drop in factory output.

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