UK 'faces prolonged period' of economic weakness
EY Item Club warns vote for Brexit will hit GDP, while household incomes will be squeezed by rising inflation

The UK faces a "prolonged period" of weaker economic growth in the wake of the decision to leave the EU, warns the economic forecasting group EY Item Club.
Chief economic adviser Peter Spencer said: "So far it might look like the economy is taking Brexit in its stride, but this picture is deceptive.
"Sterling's shaky performance this month provides a timely reminder that challenges lie ahead."
The Week
Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.

Sign up for The Week's Free Newsletters
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
The think-tank, which is sponsored at arm's length by Ernst & Young, says the economy will grow by 1.9 per cent this year. However, it expects that performance to "fizzle out as inflation rises", says the BBC.
GDP will drop to 0.8 per cent for 2017 before expanding back to 1.4 per cent the following year, the group predicts, while inflation will hit 2.6 per cent in 2017, dropping back to 1.8 per cent in 2018.
Spencer adds: "As inflation returns over the winter, it will squeeze household incomes and spending.
"The pressure on consumers and the cautious approach to spending by businesses mean that the UK is facing a period of relatively low growth."
A free daily email with the biggest news stories of the day – and the best features from TheWeek.com
The group says growth in consumer spending will slow from this year's 2.5 per cent to 0.5 per cent in 2017 and 0.9 per cent the following year. It also expects business investment to fall 1.5 per cent this year and two per cent in 2017.
Meanwhile, a senior Bank of England official told the BBC inflation may surpass its two per cent target, fuelled by the weakness in the pound caused by the Brexit vote.
Ben Broadbent said letting inflation run ahead of the target would limit the "undesirable consequences", such as lower growth and higher unemployment.
-
Does Reform have a Russia problem?
Talking Point Nigel Farage is ‘in bed with Putin’, claims Rachel Reeves, after party’s former leader in Wales pleaded guilty to taking bribes from the Kremlin
-
Five key questions about the Gaza peace deal
The Explainer Many ‘unresolved hurdles’ remain before Donald Trump’s 20-point plan can get the go-ahead
-
See the Northern Lights from these bucket list destinations
The Week Recommends The dazzling displays can be spotted across Iceland, Sweden and parts of Canada
-
What are stablecoins, and why is the government so interested in them?
The Explainer With the government backing calls for the regulation of certain cryptocurrencies, are stablecoins the future?
-
Why are beef prices rising? And how is politics involved?
Today's Big Question Drought, tariffs and consumer demand all play a role
-
Fed cuts interest rates a quarter point
Speed Read ‘The cut suggests a broader shift toward concern about cracks forming in the job market’
-
Economists fear US inflation data less reliable
speed read The Labor Department is collecting less data for its consumer price index due to staffing shortages
-
Tariffs were supposed to drive inflation. Why hasn't that happened?
Talking Points Businesses' planning ahead helped. But uncertainty still looms.
-
Why is the threat of stagflation rising?
Talking Points Inflation is sticky. Trump's tariffs won't help.
-
Pros and cons of tariffs
Pros and Cons As Donald Trump urges Nato allies to take action against China in return for ramping up US sanctions on Russia, here are the arguments for and against duties
-
Can the UK avoid the Trump tariff bombshell?
Today's Big Question President says UK is 'way out of line' but it may still escape worst of US trade levies