EU Forecasts Cast Doubt on Johnson’s U.K. Growth Ambitions

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(Bloomberg) --

The executive arm of the European Union is the latest group to cast doubt on the U.K. government’s ambitious growth targets, two weeks after the country formally left the bloc.

The economy is set to grow 1.2% both this year and next, the European Commission said in its updated forecasts published Thursday, down from the 1.4% it expected previously. That’s a far cry from Chancellor of the Exchequer Sajid Javid’s ambition to lift U.K. growth towards its post-war average of almost 3% a year.

The downgrade follows growth warnings in recent weeks from the Bank of England and the National Institute of Social and Economic Research.

Britain formally left the EU at the end of January, and has just 11 months to thrash out a new trading relationship with the bloc, a feat that most trade experts see as unrealistic.

The commission projections for 2021 are based on “a purely technical assumption of status quo in terms of trading relations between the EU and the U.K.,” it said in the report, which is “for forecasting purposes only and has no bearing on the negotiations between the EU and the U.K. on their future relations.” The risks to the forecasts are therefore “predominantly to the downside.”

The commission noted that growth was already volatile throughout last year due to stockpiling and other preparations for a possible hard Brexit.

Javid will present his budget on March 11, which is expected to include billions of pounds of new infrastructure projects as part of Prime Minister Boris Johnson’s pledge to “level up” poorer regions of the country.

©2020 Bloomberg L.P.

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