The EU on Monday sharply improved its gloomy predictions for the British economy next year, admitting that the Brexit vote would have less impact than earlier thought.
In its winter forecasts, the European Commission said it was pencilling in growth of 1.5 percent for Britain in 2017, much higher than an earlier prediction of a lowly 1.0 percent in November.
“The impact of the vote by the UK to leave the EU in the referendum held on 23 June 2016 on growth has yet to be felt,” the commission said in its forecast.
The EU along with many economic forecasters had made doom-laden outlooks for the British economy, predicting potential calamity if UK voters chose Brexit.
However, the EU did warn that 2018 growth would sink to 1.2 percent as the effects of Brexit, including a weaker currency, crimped on investment and household demand.
After a lag, “the impact of the result of the EU referendum is expected to become apparent later in 2017,” the EU said.
“The factors weighing on private consumption growth are expected to persist and intensify, and business investment is expected to increase only marginally,” it warned.
The EU’s forecasts are still lower than those made by the Bank of England, which this month also raised its forecasts significantly.
The British central bank lifted its growth prediction for 2017 to 2.0 percent and to 1.6 percent in 2018.