Les économistes prédisent la trajectoire de l’économie britannique en 2019

Les économistes prédisent la trajectoire de l’économie britannique en 2019

L’économie britannique a connu une année 2018 tumultueuse, avec un ralentissement de la croissance, la Banque d’Angleterre relevant ses taux au plus haut niveau depuis la crise financière et augmentant ses salaires plus rapidement que l’inflation. Cette année s'annonce encore plus agitée, le Royaume-Uni devant quitter l'UE en mars, mais les détails de son départ restent à convenir.

Le FT a demandé à 81 économistes d'examiner leurs boules de cristal et de répondre à diverses questions sur l'économie cette année. Dans l'ensemble, ils étaient pessimistes à propos de 2019, et presque tous prévoyaient que l'incertitude autour du Brexit freinerait la croissance économique à court terme. La plupart ont déclaré qu'il était impossible de faire des prévisions avec certitude; ceux qui se sont aventurés aux prévisions ont déclaré que la croissance resterait probablement à son niveau terne actuel de 1,5%.

Voici leurs réponses à six questions sur l'économie.

Dans quelle mesure l'incertitude liée au Brexit au premier trimestre de l'année affectera-t-elle l'économie britannique?

Howard Archer, conseiller économique en chef, EY ITEM Club

Marqué. Les indicateurs de confiance pour le mois de décembre font apparaître un sentiment d’affaiblissement de la confiance des consommateurs et des entreprises face aux incertitudes grandissantes relatives au Brexit. . . Cela devrait certainement peser sur les investissements des entreprises et, dans de nombreux cas, risquer de conduire à la prudence lorsque l'on s'engage dans de nouvelles affaires / contrats importants. La prudence des consommateurs est également probable, en particulier en ce qui concerne les achats d'articles coûteux. Le marché du logement est susceptible d'être en sourdine.

Tout dépendra de l’évolution de la question du Brexit au cours du premier trimestre. S'il n'y a pas de progrès dans les premières semaines de 2019 et qu'il semble de plus en plus probable qu'une sortie du Royaume-Uni de l'UE se produise, l'impact négatif sur l'économie sera amplifié. Toutefois, la constitution de stocks pourrait avoir une incidence limitée sur la mesure dans laquelle la constitution de stocks affecte la croissance du PIB (ou son absence de croissance), alors que les entreprises cherchent à protéger leurs stocks. Il se peut également que certains consommateurs fassent des achats préventifs sur certains articles.

Alternativement, s'il semble de plus en plus probable qu'une sortie «sans accord» sera évitée, une partie de l'incertitude pourrait s'atténuer, même s'il est peu probable qu'elle disparaisse complètement tant que rien ne garantira qu'il y aura un accord.

Nicholas Barr, professeur d'économie publique, LSE

De manière considérable, étant donné l’incertitude concernant (a) la voie vers le Brexit (ou non) et (b) l’incertitude associée à la route choisie, par exemple, s’il ya un deuxième référendum, incertitude quant au résultat.

Ray Barrell, professeur, université Brunel

La croissance continuera de stagner jusqu'à ce que la situation autour du Brexit devienne claire. La sortie augmentera, baissera ou restera la même que celle prévue en fonction des options de sortie ou de séjour disponibles.

Marian Bell, Alpha Economics

Face à l'incertitude persistante liée au Brexit, les entreprises ont réduit leurs investissements au Royaume-Uni et ont pris la décision de transférer leurs activités à l'étranger. Au troisième trimestre de 2018, la croissance cumulative du PIB depuis le référendum était inférieure d'un point de pourcentage aux prévisions. On demande maintenant aux entreprises de se préparer pour un Brexit sans accord et un nombre croissant de personnes vont délocaliser certaines opérations. Ces décisions ne peuvent pas être annulées, même dans le cas où le meilleur résultat possible pour l'économie consisterait à rester dans l'UE. Les dommages causés à l'économie du Royaume-Uni en laissant augmenter l'incertitude liée au Brexit à compter du premier trimestre devraient durer longtemps.

Neil Blake, responsable mondial des prévisions, CBRE

Beaucoup.

Danny Blanchflower, professeur, Dartmouth College

Je pense que l'incertitude est l'un des principaux problèmes en 2019. Les entreprises vont certainement rester les bras croisés en termes d'investissement – que ce soit pour différer ou pour aller ailleurs. Peut-être que les consommateurs vont commencer à prendre des précautions, sauf pour ce qui les attend. De toute façon cela semble mauvais.

Nick Bosanquet, professeur de politique de la santé, Imperial College

Dans le meilleur des cas, un frein à l'investissement et au marketing – au pire (un véritable Brexit), la panique a entraîné une chute de 3% du PIB par rapport à 2019

George Buckley, économiste en chef du Royaume-Uni et de la zone euro, Nomura

L'issue du Brexit reste une grande inconnue. Il existe quatre options principales: i) l’accord de mai, ii) un autre accord (par exemple, la Norvège pour l’instant), iii) aucun accord ou iv) ne subsistent. Dans le cas des deux derniers, l’incertitude pourrait augmenter considérablement – à long terme (pas d’accord) ou à plus court terme, une autre question référendaire n’ayant probablement pas de solution rapide. Cette incertitude se fera probablement sentir au niveau de l’investissement – l’investissement des entreprises a déjà diminué pendant trois trimestres consécutifs, ce qui n’est pas arrivé depuis la crise. Dans la mesure où l'incertitude est exprimée en livre sterling, cela pourrait ajouter aux prix à l'importation et à l'inflation, réduisant ainsi les dépenses de consommation réelles.

Sarah Carlson, Moody’s Investors Service

La baisse des investissements est l'une des principales raisons pour lesquelles le Royaume-Uni est la seule grande économie dont la croissance est tombée bien en dessous de la tendance. Nous pensons que l'incertitude persistante au sujet du Brexit continuera à freiner les investissements à long terme, l'expansion des activités et l'activité économique.

Jagjit Chadha, directeur, Institut national de recherche économique et sociale

L'incertitude liée à la sortie de l'UE prend plusieurs formes: en termes de type de sortie, quand nous sortons et même si nous sortons ou non. Nous ne savons pas non plus comment nos relations commerciales pour les biens et services, ainsi que pour le capital et le travail, évolueront pour le reste du monde à la sortie. Ainsi, même si le premier ensemble d’incertitudes est résolu d’une manière ou d’une autre au cours du premier trimestre de l’année prochaine, le second ensemble d’incertitudes pourrait peser sur l’activité qui dépend des prévisions. Une telle incertitude a déjà pesé sur l'investissement intérieur et probablement eu un impact sur les entrées d'IED et devrait donc, dans une certaine mesure, continuer à le faire.

David Cobham, professeur, Université Heriot-Watt

Dans une large mesure: il semble que nous puissions déjà le constater dans les chiffres de vente au détail bas du trimestre de Noël.

Brian Coulton, économiste en chef, Fitch Ratings

Oui, les investissements des entreprises et les dépenses de consommation seront limités, même s’ils sont résolus avant mars. Si cela va droit au fil, l'impact sera plus profond.

Diane Coyle, professeure de politique publique Bennett, Université de Cambridge

Significativement. C'est déjà bien sûr. Outre le ralentissement de la croissance au Royaume-Uni par rapport aux autres économies de l'OCDE, la baisse de la livre sterling, qui alourdit le coût des importations, aura au moins autant contribué à faire du bruit que d'autres facteurs tels que les taux des entreprises ou la concurrence en ligne. L'incertitude a un effet dissuasif sur les plans d'investissement, d'embauche et de dépense dans le meilleur des cas. Ce n'est pas le meilleur des cas. Il est difficile de croire qu’une entreprise en Grande-Bretagne approuve actuellement de nouveaux investissements ou une expansion. Bien entendu, les ventes d’essentiels pourraient être dynamisées à court terme avant la fin du mois de mars; Pour ma part, je suis en train de stocker, étant donné le nombre de nos politiciens qui semblent penser qu'une sortie sans accord n'est pas un problème.

Bronwyn Curtis, économiste indépendante

À court terme, ce seront la plupart des petites et moyennes entreprises qui s'attendaient jusqu'à présent à ce que le gouvernement négocie quelque chose de sensé. Ils ne sont pas préparés à une transition soudaine et passeront leur temps au premier trimestre à se concentrer sur le Brexit plutôt que sur le développement de leurs activités. Les consommateurs ont déjà reculé et nous en verrons l'impact lorsque les chiffres de dépenses de Noël entreront. La baisse des dépenses ne sera pas inversée au premier trimestre.

Les grandes entreprises ont déjà pris leurs décisions et ont transféré tout ce qu'elles peuvent dans l'UE, «au cas où». Des personnes fortunées ont également déménagé pour mettre leurs biens à l'abri. Cela nuira à l'économie à moyen et à long terme car ce sont principalement les plus gros contribuables, mais l'impact sera réparti dans le temps.

Howard Davies, président de RBS

L'impact sur les investissements, en particulier, pourrait être assez grave, à moins qu'un accord ne soit ratifié début janvier.

Panicos Demetriades, professeur d'économie financière à l'Université de Leicester

Je ne peux envisager aucun scénario dans lequel l'incertitude liée au Brexit disparaîtrait au premier trimestre. Si un vote populaire est convenu, cela ne se fera pas au premier trimestre. Si le Royaume-Uni se retirait de l'accord de Mme May le 29 mars, l'incertitude persisterait car les détails ne sont toujours pas finalisés – l'accord avec l'UE est davantage une déclaration d'intention qu'une description précise de la relation future entre la Grande-Bretagne et l'UE. Dans le pire des cas, un Brexit sans accord, l'incertitude, si tant est qu'il y en ait une, sera énorme.

Wouter den Haan, professeur, LSE

L’incertitude politique britannique est ridiculement élevée en ce moment. Cela ne peut pas être sain, évidemment. Accepter l'accord négocié par le Parlement contribuerait à réduire l'incertitude, mais il restera beaucoup d'incertitude et ce n'est pas une bonne chose.

Swati Dhingra, professeur agrégé, LSE

Ralentissement comme précédemment, faible croissance du PIB par rapport aux autres pays de l'OCDE. Amortissement des investissements. Difficile de prédire les chiffres ici car les prévisions à court terme ne sont pas les plus fiables, mais la direction risque d'être négative

Peter Dixon, économiste, Commerzbank

Comme il est peu probable qu'un vote parlementaire significatif ait lieu avant la mi-janvier, ce qui entraînera presque certainement le rejet de l'accord de retrait, nous pourrions bientôt envisager un abîme du point de vue de la planification des activités. Pour de nombreuses entreprises, il sera trop tard pour prendre des mesures significatives pour éviter un Brexit difficile et elles devront faire tout ce qui est en leur pouvoir pour se préparer à l'impact dans l'espoir que nous n'y parviendrons jamais. Cela implique que les investissements seront gelés, mais d'un autre côté, nous pourrions assister à une accumulation de stocks au premier trimestre. De nombreux ménages peuvent même ne pas être conscients de la gravité de la situation. Nous pourrions donc nous retrouver dans un environnement étrange dans lequel les terribles avertissements des médias ne sont pas pleinement reflétés dans les données économiques.

Noble Francis, directeur économique, Association des produits de construction

Le niveau d'incertitude accru au quatrième trimestre de 2018 a déjà entraîné une augmentation des stocks et une chute brutale des investissements majeurs, bien que de faibles investissements dans les technologies de l'information et les équipements continuent. Cette tendance se poursuivra en janvier et l’augmentation des stocks apportera un léger coup de fouet au PIB en raison de son impact sur les stocks, mais cela devrait être compensé par une nouvelle baisse de l’investissement des entreprises. Ce qui se passera après janvier dépendra d'un accord de retrait du Brexit avec l'UE qui passera également par le parlement britannique.

Charles Goodhart, professeur émérite, LSE

Je pense que l’accumulation des stocks compensera toute réduction de l’investissement en capital fixe, de sorte que l’économie britannique continuera de croître lentement, entre 0,25 et 0,5% en glissement trimestriel.

Andy Goodwin, directeur associé, Oxford Economics

L'incertitude est susceptible de fonctionner dans les deux sens au premier trimestre. D'un côté, les incertitudes entourant les futures relations commerciales avec l'UE découragent clairement les entreprises d'investir et continueront à le faire jusqu'à ce que le Parlement trouve une solution à l'impasse actuelle. D'un autre côté, plus le parlement tarde à approuver l'accord de retrait, plus il sera probable que les entreprises stockent pour se protéger des risques de perturbations après le 29 mars. Tout bien soupçonné, l'activité sera légèrement ralentie. .

Mark Gregory, économiste en chef, EY

Les entreprises peuvent avoir des effets potentiellement contradictoires en investissant dans la préparation et la constitution de stocks, en particulier dans des secteurs tels que l’alimentation et les sciences de la vie, mais nous pouvons aussi nous attendre à une diminution des investissements des entreprises nationales et de la suspension des investissements directs étrangers. Comme toujours, la solution dépendra de la réaction des consommateurs, mais avec l’aggravation des nouvelles économiques britanniques et mondiales, le Brexit risque d’exacerber la baisse de confiance des consommateurs.

Ruth Gregory, Capital Economics

Étant donné que le Brexit pourrait encore se dérouler de nombreuses façons, il est peu probable que l'incertitude liée à celui-ci – qui, selon nous, ait réduit d'environ 0,5 point de pourcentage la croissance du PIB depuis le référendum – ne s'atténue de si tôt. Entre-temps, le stockage avant le Brexit ne compensera probablement pas beaucoup. Même si la constitution de stocks s'accélère au début de 2019, il est logique que les entreprises stockent leurs importations susceptibles d'être perturbées après le Brexit. En conséquence, l’effet sur la croissance du PIB serait neutre. Dans l'ensemble, le manque de clarté devrait entraîner un net ralentissement de la croissance trimestrielle du PIB, qui ne serait plus que de 0,3% au quatrième trimestre et resterait modérée au premier trimestre de 2019.

Rebecca Harding, directrice générale, Coriolis Technologies

À la fin de 2018, le gouvernement avait conseillé aux entreprises de se préparer à un Brexit sans transaction. En un sens, cela élimine l'incertitude économique: l'économie britannique doit maintenant se préparer à un atterrissage brutal. Les entreprises doivent être prêtes à commercer avec l'UE et le reste du monde en tant que pays tiers au sens des règles de l'OMC, avec un filet de sécurité insuffisant et temporaire pour les services aérospatiaux, logistiques et financiers jusqu'à la fin de l'année. Bien que le commerce du Royaume-Uni ralentisse au premier trimestre, ce n’est pas à cause de sa sortie imminente de l’UE. Ce sera plus lent parce que les incertitudes entourant le financement du commerce sont évidentes depuis un certain temps. Un accord de financement du commerce dure généralement de 90 à 120 jours avec un financement à court terme en place de 30 à 60 jours. Avec le Brexit maintenant dangereusement dans ce délai, et avec le gouvernement suggérant que tout le monde se prépare à un "no deal", les contraintes existantes sur le financement du commerce deviendront inévitablement des obstacles. Aucune entreprise, ni aucune banque ne sera prête à prendre le risque de financer des projets sans connaître tous les coûts du financement. Ce qui a été un ralentissement caché dans le financement du commerce pourrait devenir un blocage complet d’ici la fin du premier trimestre à l’approche du Brexit.

John Hawksworth, économiste en chef chez PwC

Les enquêtes auprès des entreprises montrent déjà largement que l'incertitude liée au Brexit a eu une incidence considérable sur les investissements des entreprises ces derniers mois. Plus provisoirement, certains éléments semblent indiquer que la confiance et les dépenses des consommateurs ont également été affectées négativement à l'approche de Noël, bien que des données fiables à ce sujet manquent jusqu'à présent. Le marché de l'habitation a également continué de ralentir, notamment à Londres. Nous nous attendions à ce que ces effets négatifs sur les investissements des entreprises, le marché de l'habitation et éventuellement les dépenses de consommation persistent et s'intensifient probablement au premier trimestre de 2019, tant qu'un Brexit désordonné sans transition reste une possibilité importante.

Brian Hilliard, économiste en chef britannique, Société Générale

Il réduira sensiblement la croissance des dépenses de consommation et d'investissement en deçà des niveaux qui auraient été atteints.

Paul Hollingsworth, économiste britannique, BNP Paribas

Rien n’indique que l’incertitude, qui a lourdement pesé sur les décisions d’investissement des entreprises au cours des derniers trimestres, s’atténue. De plus, la situation pourrait s'aggraver avant qu'elle ne s'améliore. Les perspectives deviennent de plus en plus binaires, l’accord de Theresa May ne devant probablement pas être adopté par le Parlement, laissant le choix entre «pas d’accord» et «pas de Brexit» le 29 mars 2019. La croissance au début du premier trimestre pourrait rester modérée, car le Parlement votera seulement à la mi-janvier et il ne semble pas encore y avoir de majorité pour un plan spécifique B. Les entreprises devront peut-être commencer à mettre en œuvre (si elles ne l’ont pas déjà) leurs plans d’urgence, qui peuvent inclure un transfert de travail et de production. à l’étranger, ou le stockage de marchandises, ce qui stimulerait les importations et freinerait la croissance. Mais il y a place pour une ré-accélération si, et quand, l'incertitude disparaît.

Ethan Ilzetzki, conférencier, LSE

Une grande partie de cette incertitude a déjà été intégrée et a déjà affecté l'économie britannique, ce qui s'est traduit par une croissance inférieure à celle des économies comparables au cours des deux dernières années. L'incertitude a probablement culminé ce mois-ci et les effets restants constitueront l'effet réel du Brexit si et quand il se produit.

Dhaval Joshi, stratège en chef européen, BCA Research

L'incertitude d'un Brexit «sans accord» s'apparente à l'incertitude d'un ouragan qui se prépare dans l'Atlantique. Si l’ouragan finit par disparaître, vous ne le sentirez pas du tout. Et si l’ouragan frappe, vous ne le ressentirez vraiment que lorsque vous serez sur le point de l’atteindre!

Stephen King, conseiller économique principal, HSBC

Il est difficile de répondre à la simple raison pour laquelle le Brexit est un événement extraordinaire. À la suite de l'effondrement de l'empire austro-hongrois après la Première Guerre mondiale, les tramways de Vienne ont cessé de fonctionner parce que la création de nouvelles frontières a mis un terme brutal à l'approvisionnement en charbon du nord. Dans l'éventualité d'un accord «sans compromis» sur le Brexit, nous pourrions découvrir tardivement à quel point les économies modernes sont sensibles aux chaînes d'approvisionnement mondiales et régionales. Et même s'il y a un accord, il peut encore y avoir un manque de clarté sur les relations commerciales futures. Sur le plan économique, du moins, le Royaume-Uni sera probablement moins bien loti avec toutes les formes de Brexit que l'alternative consistant à rester dans l'UE.

Ashwin Kumar, économiste en chef, Fondation Joseph Rowntree

Nous avons la situation paradoxale de l'imminence d'un Brexit sans accord, ce qui augmente également les chances de ne pas avoir de Brexit. Ainsi, bien que l’incertitude prolongée réduise les décisions d’investissement à long terme et le potentiel de croissance, elle n’aura peut-être pas d’effet dramatique à court terme sur l’économie, car les paris vont dans les deux sens au début de l’année.

Ruth Lea, conseillère économique, groupe bancaire Arbuthnot

Je m'attendrais à une nouvelle réduction relativement modeste de l'investissement des entreprises (disons 2% au cours du trimestre). Il convient de noter que, malgré quelques preuves anecdotiques de retards importants dans l’investissement des entreprises au cours des derniers trimestres, les données enregistrées par l’ONS font apparaître des baisses très modestes dans l’ensemble, sans doute dans les limites de l’erreur de mesure.

Les consommateurs et les acheteurs potentiels pourraient également faire preuve de retenue, mais il sera difficile de dissocier ces événements du bruit habituel du premier trimestre, lorsque des facteurs saisonniers importants peuvent fausser les dépenses de consommation sous-jacentes et que les conditions météorologiques peuvent également avoir des effets majeurs. Je m'attendrais à peu d'impact sur les dépenses du gouvernement, voire sur les exportations.

Au total, l'impact sur le PIB du premier trimestre 2019 pourrait être très modeste et, partant, sur le marché du travail qui résiste (étonnamment?) Malgré les incertitudes liées au Brexit

John Llewellyn, Llewellyn Consulting

Considérablement. Les entreprises, et en particulier celles qui vendent en Europe, limiteront leurs investissements jusqu'à ce qu'elles sachent les conditions auxquelles elles pourront exporter. Les consommateurs ont maintenu leurs dépenses en économisant moins. Cela aurait fini de toute façon. et maintenant, le Brexit semble les rendre plus prudents. Le contexte dans lequel le gouvernement devra établir un budget manque également de clarté.

Gerard Lyons, stratège économique en chef, Netwealth

Les perspectives économiques dépendent des interactions entre les fondamentaux, la politique et la confiance. L’incertitude liée au Brexit aura un impact sur la politique et la confiance. L’économie pourrait s’arrêter facilement au cours des premiers mois, l’incertitude politique éclipsant tout le reste. La politique brute pouvant dominer début 2019, il faut garder les options ouvertes en ce qui concerne le Brexit et la politique économique.

Les scénarios les plus probables pour le Brexit semblent être l’un ou l’autre: une acceptation de l’accord de retrait du Premier ministre, probablement avec un changement de l’arrière-plan pour que le Parlement l’accepte. En effet, à mesure que la possibilité de ne pas conclure d’accord devient de plus en plus probable, il se peut qu’il existe une probabilité accrue que l’UE offre une offre améliorée au Royaume-Uni. Il y aurait là un accord de transition qui, tout en ne dissipant pas l’incertitude, ralentirait le rythme de l’ajustement; ou une absence d'accord géré ou une sortie aux conditions de l'OMC, ce qui impliquerait probablement un accord au cours du premier trimestre sur des accords sectoriels. Bien que l'incertitude persiste probablement jusqu'à la fin du mois de mars, elle pourrait être atténuée plus tôt s'il était clair que le Royaume-Uni et l'Union européenne se préparaient après mars à conclure un accord de libre-échange, comme je le pense.

En cas de non-accord géré, on devrait s'attendre à ce que des plans de relance monétaire et budgétaire soient en place au deuxième trimestre. Même si une préparation accrue au premier trimestre en vue d’une opération sans prise en charge peut entraîner une augmentation des dépenses des entreprises, il est difficile de quantifier pleinement cet impact probable, qui sera probablement compensé par un retard dans les autres plans de dépenses. De même, il est difficile de prévoir l'impact de toute incertitude, d'autant plus que cela devrait maintenir la compétitivité de la livre sterling et encourager la Banque d'Angleterre à privilégier une politique plus facile, même s'il est probable qu'elle maintiendra la politique en suspens au premier trimestre.

Ce n’est pas seulement l’incertitude liée au Brexit, mais l’ambiance actuellement négative des marchés financiers mondiaux qui pèsent sur la balance, qui pourraient peser sur les dépenses et les plans d’investissement, ce qui les retarderait.

Stephen Machin, professeur, LSE

Une grande partie de l'incertitude a déjà été prise en compte, mais des événements plus récents et une incertitude supplémentaire qui en découle peuvent amplifier les effets déjà constatés: pression à la hausse sur l'inflation des prix, entreprises réduisant leurs actifs incorporels tels que la formation des travailleurs et les heures supplémentaires, et effets négatifs associés. sur la productivité des entreprises.

Chris Martin, professeur, université de Bath

Beaucoup; les effets se feront sentir tout au long de l'année prochaine.

Costas Milas, professeur de finance à l'Université de Liverpool

Pour être clair, assez mal. Permettez-moi de préciser. Mme May a conclu un accord avec nos partenaires de l'UE, qui est un compromis. Les Brexiters se plaignent que l'accord est trop mauvais pour nous et invitent Mme May à négocier un meilleur (meilleur) accord. Sont-ils rigoler et le reste d'entre nous? Si l'accord est trop mauvais pour nous, il devrait être très bon pour le reste de l'UE. Dans cet esprit, pourquoi les dirigeants européens reviendraient-ils à la table des négociations alors qu'ils ont déjà gagné? Le comportement rationnel est également assez mince en ce qui concerne le parlement. Certains rêvent d'un vote libre qui permettrait à notre parlement de choisir parmi. . . solutions multiples et "guide" le gouvernement vers la solution la plus sensée (?). Ajoutez à tout ce qui précède la perspective de référendums conditionnels (en latin) ou référendums (en anglais). Notez que nous ne pouvons même pas nous mettre d’accord sur le pluriel du référendum. Comment pouvons-nous alors nous en occuper? . . questions référendaires à choix multiples comme beaucoup le suggèrent? Malheureusement, tout ce qui précède nous amène à une conclusion unique: nous somnambulons vers un Brexit sans accord qui affectera durement notre économie.

David Miles, professeur, Imperial College

L'impact à court terme sur la retenue de certaines dépenses peut être significatif. Mais son impact au-delà de quelques trimestres est en soi susceptible d'être faible.

Allan Monks, économiste britannique, JPMorgan

L'intensification de l'incertitude liée au Brexit affecte la confiance des ménages et des entreprises. Les entreprises ont déjà fortement réduit leurs investissements, à un moment où le taux de retour sur investissement net estimé reste élevé par rapport à la moyenne des dix dernières années. La détérioration des attentes des ménages en matière de finances personnelles est frappante, compte tenu du renforcement récent de la croissance de leur revenu réel (inflation plus faible, hausse des salaires et croissance de l'emploi) et laisse à penser que les craintes de ne pas négocier nuisent à la confiance.

Andrew Mountford, professeur, Royal Holloway

La théorie économique ainsi que le sens commun suggèrent qu'une plus grande incertitude conduira à des retards dans les décisions d'investissement ainsi qu'à des coûts supplémentaires – une assurance – pour atténuer cette incertitude. Ces deux effets seront opérationnels au premier trimestre de 2019.

Jacob Nell, économiste en chef britannique, Morgan Stanley

Nous nous attendons à un ralentissement de la phase finale et prévoyons une faible croissance du PIB de 0,1% au T4 2018 et au T1 2019. Cela reflète notre point de vue selon lequel le manque de consensus politique au Royaume-Uni sur l'Europe – reflétait le manque de majorité parlementaire pour un pays donné. sur le Brexit – conduirait à une longue période d'incertitude politique élevée dans la phase finale du Brexit, ce qui dissuaderait les investissements et ralentirait la consommation.

Rain Newton-Smith, économiste en chef, CBI

Tout dépend de ce qui se passe en janvier. Si l'accord de retrait est ratifié avec succès, l'incertitude à court terme disparaîtra et les entreprises pourront recommencer à investir. Toutefois, la croissance de l'investissement sera modérée, car il faudra du temps pour que les relations commerciales entre le Royaume-Uni et l'Union européenne après le Brexit soient clarifiées. Mais si à l’approche de la fin du mois de mars, un «pas d’accord» semble probable, nous commencerons à voir un impact important sur l’économie. Les entreprises sont déjà obligées de mettre en place des plans d'urgence pour un Brexit sans accord et un plus grand nombre de ces plans se concrétiseraient alors que des emplois et des investissements seraient perdus au Royaume-Uni. À long terme, ce qui compte, ce sont les relations que nous aurons avec notre principal partenaire commercial, l'UE. Si nous avons plus de frictions commerciales avec notre voisin le plus proche, cela réduira notre croissance et notre productivité. Quoi qu’il en soit, face aux incertitudes qui pèsent sur l’économie britannique, nous allons probablement connaître un début difficile en 2019.

Charles Nolan, professeur, université de Glasgow

Dans l’état actuel des choses, l’incertitude liée au Brexit semble devoir dominer plus que le premier trimestre de 2019. Plutôt que de constituer une période plus ou moins déterminante d’incertitude élevée, le Brexit est devenu essentiellement ouvert.

Andrew Oswald, professeur, université de Warwick

Probablement une bonne quantité. Un stockage supplémentaire est à prévoir. Les prix des terrains peuvent très bien augmenter près des zones portuaires (pour permettre le stationnement des camions). La chute des marchés boursiers et l'incertitude généralisée sur les emplois et les revenus inciteront probablement les consommateurs à s'abstenir de prendre des décisions d'achat importantes.

David Owen, directeur général et économiste en chef européen, Jefferies

Beaucoup. De toute évidence, cela dépendra beaucoup de ce qui se passera avec un vote significatif et du fait que la direction du parti travailliste décide de tenir un second référendum, mais on ne peut exclure le fait que Theresa May continue à aller de l'avant, avec une incertitude croissante. Davantage de sociétés pourraient déclencher des plans d’urgence qui ne seraient pas inversés, notamment en transférant certaines de leurs activités sur le continent, d’autres sociétés constitueraient des stocks, d’autres décisions pourraient être suspendues. Il convient également de rappeler que si Theresa May remporte un vote significatif (sur peut-être la deuxième tentative), il doit encore être inscrit dans la loi britannique, ce qui nécessite un débat et des amendements supplémentaires. Les marchés sont susceptibles d'être particulièrement volatiles avec la confusion qui règne.

Tej Parikh, économiste principal, Institut des administrateurs

On s'attend déjà à ce que la croissance économique ait nettement ralenti sous le poids de l'incertitude au cours des derniers mois de 2018, et les entreprises qui avaient espéré commencer l'année avec des investissements, de nouvelles embauches et des lancements de produits risquent de les suspendre, ce qui continuer à traîner sur l'économie.

Ann Pettifor, directrice, Recherche sur les politiques en macroéconomie

À ce jour, le Brexit a principalement pour effet de déprimer les investissements des entreprises. Cela continuera sans aucun doute à stagner ou à chuter. Compte tenu du ralentissement de la conjoncture économique mondiale et européenne, le Royaume-Uni continuera d'être à la traîne par rapport aux économies de comparaison. Si, au premier trimestre, il devient clair que nous nous dirigeons vers un Brexit chaotique, la confiance des consommateurs et des entreprises s'effondrera de manière évidente et continuera.

John Philpott, l'économiste de l'emploi

Tant que la trajectoire précise du Brexit ne sera pas claire, les investissements nets des entreprises et les recrutements nets du secteur privé seront faibles. Les consommateurs resteront également prudents. Si l'incertitude persiste jusqu'au 29 mars, la croissance économique devrait stagner au premier trimestre.

Kallum Pickering, économiste en chef, Berenberg

Malgré l'incertitude accrue, la croissance du PIB réel devrait rester stable au premier trimestre, à peu près au même rythme que le trimestre précédent, qui était de 0,3% à 0,4%. Bien que le risque d'un hard Brexit pèse probablement sur l'investissement, le même risque entraînera probablement une augmentation des stocks des entreprises et des ménages, stimulant ainsi la consommation et la production. Ces deux tendances vont se compenser grossièrement.

Christopher Pissarides, professeur, LSE

Il y aura une augmentation modérée du comportement lié à l'incertitude par rapport aux niveaux actuels, qui sont déjà importants.

Jonathan Portes, professeur d’économie et de politique publique, King’s College, Londres

L’incertitude liée au Brexit a déjà affecté l’économie, avec essentiellement pas de croissance au cours des derniers mois; nous sommes peut-être déjà en récession. Je m'attendrais – en l'absence d'une résolution rapide qui semble improbable – aux répercussions sur les entreprises plus grandes, plus largement, aux consommateurs et aux entreprises.

Vicky Pryce, conseillère économique en chef, Centre de recherche sur l'économie et les entreprises

Assez significatif. Il est clair que le résultat du vote sur l'accord de retrait début janvier, à supposer que cette fois-ci, soit avancé, sera important, mais s'il n'approuve pas le Parlement, il créera de nombreuses autres incertitudes. L’année dernière, l’incertitude liée au Brexit a été de plus en plus souvent citée comme l’une des principales raisons de la baisse de l’optimisme et de la baisse de la demande dans de nombreux secteurs – des services à la construction automobile, en passant par le pessimisme des consommateurs qui est tombé à son plus bas niveau en cinq ans, malgré un nombre record d’emplois. Les investissements des entreprises ont chuté au cours des trois premiers trimestres de 2018, le secteur manufacturier était en récession au premier semestre et n’a connu qu’une amélioration modeste et intermittente depuis et la confiance du secteur est à son plus bas depuis des décennies en dépit de la faiblesse de la livre. Il est difficile de voir comment les sentiments vont tourner. Si l'accord de retrait est voté, les entreprises peuvent au moins s'attendre à une période de calme pendant la transition, mais tant de choses resteront en suspens et les entreprises et les consommateurs resteront prudents.

Sonali Punhani, économiste britannique, Credit Suisse

Les incertitudes liées au Brexit ont déjà un impact sur l’économie britannique. L'activité et l'optimisme ont ralenti à des niveaux modérés et ont amené les entreprises et les clients à annuler ou à reporter les décisions en matière de dépenses et d'investissement. Cela devrait se poursuivre au premier trimestre jusqu'à ce que le chemin du Brexit soit clarifié et même s'accélérer à mesure que nous nous rapprochons de l'échéance du 29 mars 2019.

Ricardo Reis, LSE

Cela dépend s'il y a un vote significatif à la Chambre des communes au début du mois de janvier ou non. Si nous arrivons à la fin du mois de janvier sans avoir encore une idée précise de ce que seront les restrictions commerciales et le cadre réglementaire auxquels les entreprises seront confrontées dans à peine trois mois, il est alors difficile de penser que cela n’aura pas d’effet négatif sur l’économie au premier trimestre. À l’heure actuelle, il y a de fortes chances pour que le «Brexit soit dur» dans quatre mois, un résultat que presque tout le monde, des politiciens aux économistes, en passant par le Brexiters et les autres, pense que ce sera terrible pour l’économie. Jusqu'à ce que cela quitte la table, il est difficile de voir un trop grand nombre d'entreprises prêtes à investir sérieusement.

Philip Rush, fondateur et économiste en chef, Heteronomics

L’incertitude persistante dans le processus du Brexit nécessite une intensification de l’activité de précaution. Une partie de cela nécessitera de transférer les dépenses à l'étranger dans le cadre de la planification d'urgence, mais l'accumulation des stocks devrait avoir un effet compensateur. Globalement, je doute que l'incertitude pèse lourdement sur les données de titre.

Yael Selfin, économiste en chef, KPMG

L’incertitude liée au Brexit au premier trimestre affectera probablement l’économie britannique dans deux directions opposées. On the one hand, business investment and households’ purchases of big items could be further postponed. At the same time, contingency measures are likely to be stepped up, boosting activity.

Philip Shaw, chief economist, Investec

An obvious issue is that we still do not know which Brexit regime it is that we are heading towards. In terms of the short-run, it is possible that the UK fails to enter a 21-month implementation period after March and hurtle out of the EU without a deal. Meanwhile, the shape of Britain’s longer-term relationship with the EU remains as unclear as ever. Our baseline view is that the government will avoid “no deal” and will begin to hammer out a trade framework during the spring. But the risks of either a messy exit or an Article 50 extension (which would prolong the uncertainty) are growing. It is easy to envisage Brexit related question marks weighing further on business investment and therefore the economy as a whole over the start of next year.

Andrew Simms, co-director, New Weather Institute

It is hard to overstate the potential impact of the Brexit bridge-collapse on not just the UK economy, but its cultural climate and quality of community life. A wave of disingenuous commentary has claimed that previous negative warnings were wrong because “they haven’t happened yet”. On one hand, rather obviously, that’s because “it hasn’t happened yet”, but of course there are clear, discernible, signs of damage already. Business investment is shrinking, real wages stagnant, and even the brief boost from sterling’s depreciation after the referendum would seem to have run out with news that the UK’s current account deficit rose in the last quarter. Just as damaging as some of these practical economic realities, however, have been the messages coming from political leaders. From the former foreign secretary, Boris Johnson’s, contemptuously insulting dismissal of the reasonable fears of business, to the former Brexit secretary, Dominic Raab’s hilariously detached and blithe admission that he didn’t realise the economic importance of the Dover-Calais trade link to Europe, we have been witness to a technicolour display of incompetence that would be comic if it were not so critical. If an administration set out, wilfully, to create uncertainty and undermine confidence in the UK economy it could hardly do a better job.

Nina Skero, director and head of macroeconomics, CEBR

Economic growth is set to slow in Q1 2019 as uncertainty dampens business investment, consumer expenditure on big-ticket items and housing market activity. The economic uncertainty is compounded by a fragile political picture. An early general election which could see a Corbyn-led government is still a possibility. This will further discourage investment into the country.

Andrew Smithers, author

Much less than the FT likes to assume. The impact on supply potential is almost zero so far and the impact on demand is probably limited to corporate investment, where it is largely used as an excuse for bonus-driven low investment.

Gary Styles, director, GPS Economics

This is extremely difficult to assess. I expect quarterly output growth could be around 0.2 per cent lower than otherwise due to the widespread uncertainty. The postponement of investment and consumption decisions and trade upheavals are likely to dominate economic activity adjustment during 2019.

Suren Thiru, head of economics and business finance, British Chambers of Commerce

Brexit related uncertainty is likely to weigh significantly on UK economic growth in the first quarter of 2019 through weakening business confidence and stifling investment intentions. Brexit uncertainty together with moderating growth in key export markets and persistent trade tensions are also likely to limit the contribution of net trade to UK growth. Subdued real wage growth and declining consumer confidence is likely to squeeze household expenditure. As such, UK GDP growth of just 0.2 per cent is likely in the first quarter of 2018.

Phil Thornton, director, Clarity Economics

The economic impact will depend on the level of political chaos and specifically the outcome of the Commons vote on Theresa May’s Brexit in the week of 14 January. Whatever the outcome there will be three main channels for the economy: the impact of uncertainty on consumer spending; the impact of uncertainty on business investment; and the businesses’ decisions on opening operations in the EU. If May’s deal passes, the impact will be relatively low. If the deal falls then the impact on consumer and business spending will be high — although ironically a rush by firms to make plans for EU investment might boost UK GDP in that first quarter.

Samuel Tombs, chief UK economist, Pantheon Macroeconomics

The adverse impact of Brexit uncertainty built over the course of 2018 as the March 2019 deadline approached. By Q3, business investment was 2.2 per cent lower than in the final quarter of 2017, while retail sales likely stagnated between Q3 and Q4. Measures of both business and consumer confidence ended 2018 at multiyear lows, so the omens for Q1 GDP are not good. That said, the sharp fall in oil prices will boost households’ real incomes, while we continue to think that the prime minister eventually will have to opt for a “Norway-plus” style Brexit in order to get a deal through parliament, leading to a sharp recovery in economy-wide confidence late in Q1. As such, we doubt that GDP will contract in Q1 and look for a modest 0.2 per cent quarter-on-quarter gain (the same as we expect in Q4).

Kitty Ussher, economist and former Treasury minister

There will be volatility affected by perceptions of political risk. Should no deal be reached by parliament then there will be a short-term collapse in confidence similar to that experienced in the weeks after the referendum itself, with medium-term effects on order books and the real economy at least until trading arrangements are clarified and, depending on the detail, possibly for a significant period of time afterwards.

John Van Reenen, professor, MIT economics department and Sloan management school

It will affect it negatively, especially over investment and hiring (as it is currently doing).

Konstantinos Venetis, senior economist, TS Lombard

It will keep consumers in defensive mode and postpone the hoped-for rebound in business investment, holding private demand down. With the rest of the world set to slow in 2019, risks to the growth outlook are skewed to the downside in the first quarter.

Daniel Vernazza, chief UK and senior global economist, UniCredit

Brexit-related uncertainty is likely to weigh more on the UK economy in the first quarter. Of course, much depends on when — and if — there’s more clarity on Brexit, but I expect the ratification process will go down to the wire, as all sides first seek to exhaust the other possibilities. Business surveys have already weakened materially and firms are delaying investment in larger numbers, which is entirely rational, particularly given that more clarity — good or bad — should not be too far away.

Partly offsetting the negative effects of uncertainty in the first quarter, there could be a temporary positive impact on UK GDP from the front-loading of consumption. Consumers may bring forward purchases, particularly of major items, in order to avoid a rise in prices in the event of a disorderly exit stemming from a depreciation of sterling, supply shortages and possible tariffs on EU imports. Given the likelihood of supply shortages arising from stoppages and delays at the border, another reason for front-loading would be to safeguard supplies. The same is true for imports, which would have an offsetting, negative impact for GDP in the first quarter.

Keith Wade, chief economist, Schroders

Significantly, there is every incentive to delay major purchases until 29 March. Business investment, housing and durable goods will be most affected with the result that GDP could decline.

Martin Weale, professor, King’s College

As things stand now, I expect very considerable uncertainty. But the impact of uncertainty on the economy is not well-defined — sometimes it matters and sometimes it does not. Taking the combination of Brexit uncertainty and weaker growth on the continent, I would not be surprised if the economy does not grow in the first quarter.

Simon Wells, chief European economist HSBC

Consumer confidence is at a five-year low, important service-sector indicators have fallen and the eurozone has slowed sharply. The signs for Q1 are not great.

Peter Westaway, chief economist, Vanguard Asset Management

The performance of the UK economy will be dominated by Brexit-related concerns as firms and households continue to hold off on their spending until the fog of uncertainty lifts. As a result, growth in Q1 is likely to be barely positive.

Matthew Whittaker, deputy director, Resolution Foundation

Hugely. We’re already seeing businesses and consumers in something of a holding pattern, waiting to see what happens next. That’s likely to continue through the first quarter. Indeed, even when some clarity arrives, it’s likely to take people a long time to work out quite what it means and so settle on a new equilibrium.

Mike Wickens, professor, University of York

It won’t affect consumption — it might even increase it if people decide to increase stocks as a precaution — but it will continue to deter investment. This will continue until the future trading relations are determined. The next three months are unlikely to be especially significant for investment as it looks further ahead.

Trevor Williams, visiting professor, University of Derby

Greatly! It is safe to say that as actual Brexit approaches, much of the complacency about its impact is dissipating fast. Businesses are now planning for hard Brexit and indeed for the Brexit deal — both have negative consequences for investment in the year. I would not be shocked if growth was flat or slightly negative in Q1 2019.

Alastair Winter, chief economist, Daniel Stewart & Company

I would expect the worst part of the uncertainty to be cleared by the end of January. The elimination of no deal, “managed” or otherwise, will have a beneficial economic effect but more likely to come through in Q1 in consumer and business confidence surveys rather than hard data from the ONS. Plans for increased public spending will be expected if not yet announced by the end of the quarter.

Garry Young, NIESR

According to the Bank of England’s decision maker panel, business uncertainty about Brexit spiked up in the latest figures for August-October. No doubt it has increased more since then and will continue at a very high level in the first quarter and probably beyond. The evidence suggests that this uncertainty has been responsible for lower investment than would otherwise have been the case as businesses have deferred spending until the Brexit outcome becomes clearer. I would expect this to continue, weakening both demand and supply in the short term. To some extent the effect on demand will be offset by greater stockpiling ahead of Brexit, but I doubt that supply will make up the ground lost and productivity will remain weaker than it might have been.

A lot will depend on the outcome of the Brexit withdrawal deal vote on January 14. If that passes, then there will be a transition period until the end of 2020 which will give a bit more certainty. But, if it doesn’t, then there will be heightened uncertainty that will likely dampen business investment. But, by the same token, the greater likelihood of leaving on March 29 may speed up business spending on contingency planning in the first quarter of the year.

Azad Zangana, senior economist, Schroders

High uncertainty has already started to weigh on corporate sentiment and investment decisions, and it looks like this is spreading to the household sector. As we approach the deadline, we may also see greater volatility in markets, especially in the pound.

Name withheld

Outcomes are becoming more extreme (between hard Brexit and a new referendum with stay) rather than converging (say the fine tuning of a negotiated deal) to be potentially resolved in a short time span (March 29?). This will condition many economic decision makers. In any event, a lot of harm is already done. Even a stay will not bring back the 2016 mindset.

How will Brexit affect the UK economy over the course of 2019?

Howard Archer, chief economic adviser, EY ITEM Club

Heightened Brexit uncertainties will weigh down activity in the first quarter. Assuming a deal is agreed, the economy should pick up to a limited extent due to diminished uncertainty. Consumer spending should be supported by a gradual improvement in consumer purchasing power as earnings growth firms modestly and inflation eases back overall during the year. Meanwhile, business investment should benefit from ultimate agreement on a Brexit deal and it is also likely to be lifted by some firms looking to increasingly invest in automation to make up for labour shortages and try to boost productivity. But ongoing uncertainties about the longer term UK-EU relationship are likely to limit the upside for business investment. Meanwhile, net trade is likely to offer little help to growth as the sweet spot facing UK exporters is further diluted by slowing global growth and a firmer pound after a Brexit deal. On this basis, we expect GDP growth of 1.5 per cent in 2019.

However, if the UK does end up exiting the EU without a deal next March, growth in 2019 is likely to come in substantially lower (probably around 0.5-0.75 per cent) as major uncertainty hits consumer and business sentiment and investment. Sterling would likely fall sharply. This would push up input costs for businesses and cause inflation to rise markedly, thereby squeezing consumer purchasing power. But the weaker pound would boost UK exports. Trade will also be affected as both parties levy tariffs and non-tariff barriers are introduced across a range of sectors, although, with both export and import growth suffering, the effect on GDP growth from this source would be ambiguous. We would expect the Bank of England to respond by cutting interest rates and the chancellor to provide some fiscal stimulus to help growth.

Nicholas Barr, professor of public economics, LSE

Negatively, at least until such time that both of the following have happened: A “sensible” Brexit choice, eg second referendum result is Remain; a result that does not cause uncontained political conflict. If only one of those outcomes eventuates, or neither, adverse effects will continue throughout 2019.

Ray Barrell, professor, Brunel university

There appear to be four options and outcomes for 2019, so on average output will fall by 0.5 per cent. That will not happen, but one of the below will. 1) Leave with no deal and move to zero tariffs. Barriers to trade with Europe will have to rise immediately, and output will fall 4 per cent as a result of disruption. 2) Leave with no deal but change nothing immediately. Regulatory and tariff alignment remain, but foreign firms will start to leave. Output will fall 1 per cent at most. 3) Leave with about the existing deal. Alignment remains, and so do foreign firms. Output will remain flat. 4) Stay. Output will rise 1 per cent as foreign firms put productivity-increasing changes in place that have been delayed for three years.

Marian Bell, Alpha Economics

Given the current heightened level of uncertainty over the shape of Brexit and the substantial risks involved, it is difficult if not impossible to predict the path of the UK economy. The damage done to the UK economy by allowing such uncertainty to continue may not be completely reversible, even if the country decided to stay in the EU.

Neil Blake, global head of forecasting, CBRE

A weak Q1. Bounce back in H2 if a deal is agreed.

Danny Blanchflower, professor, Dartmouth College

Obviously depends on the nature of the Brexit but the UK is slowing, Europe is slowing and by mid-2019 I suspect the US will be also, driven by a major [Federal Reserve] error in raising rates along with a trade war.

Nick Bosanquet, professor of health policy, Imperial College

Hard Brexit will bring a rush to the exit as companies shift activities to the EU. The 40 per cent of total UK trade which goes to the EU is not evenly spread across all companies — there are a sizeable number specialised in EU trade which must move. Announcements about moves and plant closures will lead to confidence collapse, which will slow growth for years to come. Even with May agreement, the two-year transition will brake activity, with uncertainty about longer term trading relationships. The cumulative effects from years of prolonged uncertainty are being ignored. Brexiters ignore the timing problem — effects on current EU trade are immediate — it would take time for trade agreements outside of the EU to make up the loss.

George Buckley, Nomura

Whatever the outcome, ongoing uncertainty will keep a lid on economic growth for the time being — particularly investment but to a lesser extent consumer spending. A no-deal would mean a sharp recession and, in our view, a loosening of monetary policy (rather than the mechanical tightening that the BoE suggested). If a deal with transition is passed that could end up unlocking business investment, and appreciation of sterling, higher consumer confidence and spending — albeit under the circumstances of a global slowdown which is unlikely to pass the UK by. Another referendum ending up with a Remain vote would raise uncertainty in the near-term but would be supportive of growth further ahead.

Sarah Carlson, Moody’s Investors Service

Our forecasts assume that a “no deal” Brexit will be avoided, but that growth will still remain below trend at 1.6 per cent. However, should the UK exit the EU without a deal, we think that we will see a sharp depreciation in sterling and the economy will enter a recession as temporarily higher inflation puts a squeeze on real wages, and in turn, weighs on consumer spending and overall economic growth.

Jagjit Chadha, NIESR

Any form of exit seems likely to depress activity compared with the case in which the UK remains in the EU. The greater the disruption to trade, the greater the negative long-run impact, which also has a differential regional impact and is strongest where European partners are best able to provide substitutes. The economy has already started to adjust this long run and on exit will continue to do so. The most likely case of an exit on terms that introduce limited frictions will continue to subdue economic activity below where it would otherwise be. But because the impact is likely to affect both the demand and supply side it does not create a prima facie case for more accommodative monetary policy.

David Cobham, professor, Heriot-Watt University

If May’s deal gets through parliament, not so much. But if it does not, then there will be continuing turmoil and uncertainty through the year with depressing effects on investment and consumption (and no serious end to austerity).

Brian Coulton, chief economist, Fitch Ratings

It all depends on how the politics plays out. If there is some resolution or fudge which kicks the can down the road then there could be a recovery in growth and a sterling rally as immediate uncertainty eases. But in the case of a cliff-edge no deal the impact could be quite damaging. It’s virtually impossible to model the potential impacts using traditional forecasting frameworks. We have tried to illustrate a plausible scenario by calibrating it on the experience of the UK during the fuel protests nearly 20 years ago which had a big impact on disrupting supply chains etc. That suggested something akin to the early 1990s recession. But it really is very uncertain.

Diane Coyle, Bennett professor of public policy, Cambridge university

If the Brexit negotiations had been moderately competently handled, the UK economy would have performed somewhat worse than it otherwise might. Given the political shambles we’ve had instead, the outlook is anything from lacklustre to catastrophic, but who knows?

Bronwyn Curtis, independent economist

Even if there is no Brexit, growth will be lower than it might have been because businesses have held off investing in their businesses in the UK since the Brexit vote. There will be a “no Brexit” bounce in sterling markets and business investment, but growth will still be lower than it would have been as businesses that have relocated to the EU will not reverse those decisions. Growth may be about 1.5 per cent.

So far, much of the uncertainty over Brexit has been reflected in sterling volatility. A “no deal Brexit” would see sterling hit and I wouldn’t be surprised to see sterling at parity with the euro. The fear factor would be high and the newspapers would be full of shortages and disruptions. Somewhat perversely, sterling may bounce as foreign investors see the possibility of a “cheap deal” and hot money may flow in.

Saturday, 5 January, 2019

Growth would be lower, inflation higher and the Bank of England will hike rates. I’d also expect to see fiscal policy loosened. Perhaps a cut in VAT?

“Brexit with a deal” would see a short-term positive response on sterling, business investment and consumer spending as there is now some certainty about the withdrawal. However “the devil is in the detail” and, as that is revealed, the reality will elicit a negative response from businesses and households. Services trading costs are likely to rise somewhere between 5 per cent and 10 per cent and services are more important than goods to UK trade. The Bank of England may hold rates, but fiscal policy will still be loosened under the guise of helping small businesses adjust. The reality is that it will be a political gesture in case a general election has to be called.

The greatest harm to the economy may be political as the turmoil continues and the possibility of a general election rises.

Howard Davies, chairman, RBS

Decisions on investment, delayed as a result of Brexit uncertainty, have been made. Whatever happens that will depress growth. If a very soft Brexit — Norwegian style — were to be agreed, there could be a quick rebound.

Panicos Demetriades, professor of financial economics, Leicester university

Brexit-related uncertainty will not come to an end very easily unless there is a people’s vote in which Remain prevails. Even if the UK exits on March 29 following Mrs May’s deal, uncertainty will continue until the end of 2020 while negotiations continue to finalise all the details, as well as the all-important question of Northern Ireland.

Wouter den Haan, professor, LSE

Who knows, I definitely do not. There are so many possible time paths that could be followed.

Swati Dhingra, associate professor, LSE

Depends on the outcome of the negotiations. Negatively in general, with greater slowdown in the event of a no deal. Big challenge is services sector which does not figure prominently in the current deal.

Peter Dixon, economist, Commerzbank

Everything depends on the type of Brexit. A disorderly outcome will not bode well for activity in April and we could be looking at an outright recession in 2019, coupled with a sharp depreciation of sterling with all the attendant inflationary consequences. In the more likely scenarios where the no-deal outcome is avoided but the hard decisions are merely postponed, I would expect more of the same — in other words, growth below pre-referendum rates with consumption and investment remaining weak and policymakers remaining trapped by the spiral of general economic uncertainty.

Noble Francis, economics director, Construction Products Association

Clearly, a lot depends on whether Theresa May can get her draft Brexit Withdrawal Agreement through in mid-January (or if it fails on the first occasion and gets through on a second vote in late January). Most macroeconomic forecasters, and the markets, have assumed a deal. If a deal passes through the UK parliament, then we are expecting UK GDP growth of 1.4 per cent in 2019 and the stockpiled materials and products should be released, easing supply and price inflation in Q2 and Q3. In addition, economic growth should be boosted as business investment rises due to increased certainty in the short term and a greater degree of optimism over an agreement between trading relations between the UK and EU post-implementation period and potentially an extension of the implementation period.

If the Brexit Withdrawal Agreement fails to get through the UK parliament and “no deal” becomes the most likely outcome, expect a sharp fall in sterling, increases in import prices and a sharp fall in business and consumer confidence. Government, for all its technical notices since July, businesses and households remains thoroughly unprepared for “no deal”. A sharp fall in UK GDP during Q2 and Q3 would inevitably occur before systems adjust.

Charles Goodhart, professor emeritus, LSE

We do not know, because we do not know what kind of Brexit outcome will emerge from the fog.

Andy Goodwin, associate director, Oxford Economics

It depends on whether parliament approves the withdrawal agreement! If Brexit is orderly then to some extent it will be back to business as usual, although firms who are heavily dependent on exporting to the EU will remain reluctant to commit to major investments until there is greater clarity on the future trading relationship. If Brexit is disorderly then we would expect to see significant disruption to trade and a 10 per cent depreciation of sterling, with policymakers forced to loosen fiscal and monetary policy to try to soften the blow. The UK is likely to flirt with recession in mid-2019 in a “no deal” scenario.

Mark Gregory, chief economist, EY

Even if we sign a withdrawal agreement, I don’t believe this will unleash a spree of business investment. The UK is going to be approached generally on a “care and maintenance” basis by multinationals, just as France was for the last few years before Macron. The UK will therefore lose out on growth investment and we will see our competitiveness decline relative to our peers until we have a final trade deal.

Ruth Gregory, Capital Economics

Our base case is predicated on the ratification of something fairly close to Theresa May’s deal in parliament in early 2019, paving the way for a 21-month status quo transition period. In this scenario, our expectation is that GDP growth will rise from just 1.3 per cent this year to about 2.0 per cent in 2019 and 2020, as a pick-up in real pay prompts a recovery in household spending growth and a lifting in Brexit uncertainty supports investment.

A “no deal” Brexit is the obvious downside risk, to which we assign a 20 per cent probability. We think that an orderly “no deal” Brexit in which agreements are struck on many issues including aviation, customs checks and visas, could knock about 1 percentage point off GDP growth. In a disorderly “no deal”, in which relations between the UK and EU break down and the UK leaves with minimal side agreements in place, the hit to activity could be as high as 3 per cent of GDP, with an outright recession probable.

Rebecca Harding, chief executive, Coriolis Technologies

The problem with the advice to plan for no-deal Brexit for the trade and trade finance sector is that many of the decisions that will be made during the first quarter of the year will be at best hard to reverse. Bank trade finance functions are already moving to Frankfurt and Amsterdam; the infrastructure to support transactions as well is the flip of a messaging switch away. During the course of 2019, the impact of decisions being made now and in the first quarter of 2019 will be felt on trade, particularly exports. This may not affect the global corporate in the first instance: these companies are funded through their own, open account, trade finance and will be able to move resources over time to manage their global operations efficiently. However, smaller businesses, because of the shorter-term nature of the financing that they require, and because they are relatively expensive to fund, will find it more difficult to access finance. This is already evident in surveys such as the Santander Trade Barometer, which suggest that there was a marked increase in the numbers of smaller businesses citing access to finance as a challenge to their international growth. Trade takes a long time to shift substantially and the impact of tariff changes, or even in shifting supply chains, will not be seen in the trade numbers in 2019 necessarily. But the small businesses at the end of global supply chains which most need financing to sustain employment and innovation and to allow them to grow, will be the first to be hit, with wages and employment security for the millions of people employed in them damaged.

The effect on the UK’s small businesses will combine with existing pressures in the economy such as uncertainty, high levels of household indebtedness and rising inflation, to damp demand and investment. The effects may not be felt immediately on trade, but they will be felt in the real economy during the course of the year.

John Hawksworth, chief economist, PwC

Our main scenario assumption is still that, even if only at the last minute, a political solution will be found to avoid a disorderly Brexit with no transition at the end of March 2019. If a reasonably smooth Brexit can be achieved, then there could be a gradual revival in business investment over the course of the year. But UK growth is likely to remain moderate (ie below 2 per cent), particularly given an expected moderation in global growth next year as the US, eurozone and Chinese economies all slow down. If there is a disorderly “no deal” Brexit at the end of March, then it is highly likely that the UK would suffer at least a mild recession and possibly a severe one. The lack of any real historical precedent makes it very difficult to put precise figures on such a scenario. There are also plausible scenarios where Article 50 is extended, for example to allow time to hold a second referendum. This would extend the period of uncertainty and might be bad for the economy in the short term, but there could be longer term economic benefits if such a referendum produced a decisive vote in favour of remaining in the EU. However, this is far from guaranteed, so this is a higher risk option from a business perspective than agreeing a deal now.

Brian Hilliard, chief UK economist, Société Générale

See point 1. Once a deal is finally struck, which could take until the middle of the year, confidence should pick up and growth with it.

Paul Hollingsworth, UK economist, BNP Paribas

The UK economy’s performance in 2019 depends entirely on the outcome of Brexit negotiations. Should there be an “orderly” Brexit, we see scope for economic growth to gather momentum. There are three factors that should support the economy. First, there is scope for investment to recoup some of the ground lost due to Brexit uncertainty in 2018. Second, we expect a further strengthening in real wage growth, which should underpin relatively robust consumer spending. And finally, the outright fiscal stimulus announced at the chancellor’s Autumn Budget should provide a fillip to growth. However, should the Article 50 clock strike 11pm and the UK leave the EU without a deal, we see a significant front-loaded shock to the UK economy. A recession would probably loom, although support from policymakers as well as some pragmatic solutions to avoid disruptions, may help to mitigate some, but not all, of the shock.

Ethan Ilzetzki, lecturer, LSE

It is currently entirely unclear whether and how the UK will leave the EU. A disorderly Brexit will certainly have negative short- and long-term effects on the UK economy. I don’t expect other scenarios (current agreement, second referendum, postponement) to have an impact within the upcoming year, but these will have longer-term impacts.

Dhaval Joshi, chief European strategist, BCA Research

In terms of the impact on the UK economy in 2019, Brexit is binary: “no deal” versus anything else. A “no deal” on March 29 would create a palpable shock to the economy, while the other outcomes — a deal with transition or a delay — would create an economic “relief recovery”.

Stephen King, senior economic adviser, HSBC

See answer to question one. I don’t buy the extreme interest scenario presented by the BoE in its worst-case Brexit scenario. Even if there is a negative supply-side shock with all sorts of unfortunate implications for the output gap, the political economy of Brexit is such that the Bank would surely be wary of throwing monetary fuel on a recessionary fire.

Ashwin Kumar, chief economist, Joseph Rowntree Foundation

I see little prospect of a definitive outcome for Brexit in the early part of the year. Theresa May’s deal postpones substantive questions about future trading relationships. If we are moving towards a no-deal exit, there is probably a parliamentary majority for a short-term measure such as extending Article 50 to avoid that happening. While this of course would be far better than a no-deal exit, it will prolong uncertainty. Finally, if support increases for a referendum that puts the whole enterprise in question, this will not happen quickly. There is likely to be a period of some months of campaigning, again prolonging uncertainty.

Therefore, Brexit-related uncertainty will be the dominant theme in the UK economy, reducing the willingness of businesses to make longer term decisions, but also giving hope to those who want to avoid Brexit and those who want to leave without a deal. However, there is a chance that we might have a clearer picture of longer-term outcomes towards the latter part of the year. In that case, we may start to see the economy begin to adjust towards those outcomes. Essentially the further away from the EU our likely long-term relationship, the higher the likelihood of inflationary pressures, reduced economic activity and increased fiscal pressure.

Ruth Lea, economic adviser, Arbuthnot Banking Group

My central case is for a “managed” no-deal Brexit, without a transition. There are increasing signs of preparedness for such an outcome in both the UK and the EU.

Under these circumstances, I would expect some disruption to trade and business in 2019 Q2 and 2019 Q3, but business should have adapted (and got through the “teething troubles”) by 2019 Q4. GDP may even dip modestly in 2019 Q2 and 2019 Q3, but I would expect it to recover in 2019 Q4. In other words, the dip should be only temporary, assuming no damaging unforeseen circumstances, with relatively little impact on unemployment.

Granted, the usual definition of “recession” is two consecutive quarters of falling output, but I would hesitate to refer to my expected “scenario” as a recession, preferring to confine the term to situations when there is a prolonged and damaging hit on GDP and employment, as in the mid-1970s, early 1980s, early 1990s and the Great Recession.

If, however, the Withdrawal Agreement “deal” is implemented (which I hope will not be the case), then there should be even less impact on the economy, as we will remain de facto an EU member during the transition period even though de jure we will have left.

John Llewellyn, Llewellyn Consulting

That is unanswerable. It depends entirely on what happens re Brexit — ranging from a crash out to staying fully in. But any outcome other than remaining fully in will impose at least some cost on the economy, and that will cumulate for a number of years.

Gerard Lyons, chief economic strategist, Netwealth

This depends upon the agreement made and the path subsequently chosen. If there is an agreement, and thus certainty about what lies ahead, then there could be a deal dividend, as the chancellor has indicated. If there is a managed no deal then how this impacts the economy will depend, crucially, on planning and on any agreements made in the first few months of the year. Its impact will be greatest on those sectors currently enjoying frictionless trade with the EU but that could be minimised or indeed offset by expectation of a future free trade agreement. My forecast is for the economy to grow 1.5 per cent in 2019 and 2.2 per cent in 2020, helped by greater certainty about what lies ahead.

Stephen Machin, professor, LSE

It seems likely to continue to have negative effects which, as per my response to the previous question, may get magnified the closer the outcome is to no deal. The negative shocks are likely to have deleterious outcomes for workers and firms, especially if the exchange rate continues to depreciate.

Chris Martin, professor of economics, Bath university

Best guess: output and real wage growth 1 per cent to 1.5 per cent lower — inflation about 1 per cent higher. Brexit plus significant caps on migration will probably lower employment and real wages by up to 10 per cent over the next five years.

Costas Milas, professor of finance, Liverpool university

Brexit is already taking its toll on business investment and, consequently, our economic prospects. Arguably, the only sensible way forward is a referendum based on a tweaked version of Mrs May’s Brexit deal and Remain. Please spare us the calamity of . . . multiple choice questions in a possible referendum. University students quite often have difficulty in dealing with (or answering) multiple choice questions in a standard university exam. Why do we want to “test” the “knowledge” of the whole population on this? We need to draw a line and move forward. A win for Mrs May’s deal will provide a mild “Brexit-dividend” boost. A win for Remain will boost the economy even further. Of course, there is also the risk of no-deal Brexit. Contrary to what Brexiters are telling us, this should bring our economy down. Please don’t underestimate the no-Brexit scenario. Our government is sleepwalking towards this one.

David Miles, professor, Imperial College

To answer that you need three things: 1) a set of possible Brexit outcomes. 2) a probability assessment of each. 3) a model of how the Brexit outcomes affect employment, investment, consumer spending, prices etc. Supplying any one of those three things is more a matter of guesswork than science. When economists have little useful to say on issues it is wise to say little. (See final comment below).

Allan Monks, UK economist, JPMorgan

The UK will continue to underperform relative to its main trading partners, especially in the first half of the year. The weaker currency is likely to push imported inflation back up and restrain real incomes, while business investment is restrained further. If the UK enters a smooth transition this could lead to a modest growth recovery in the second half, as firms with shorter investment horizons resume spending and real incomes improve. Fiscal policy will also provide an added boost to growth. A long delay in Brexit could also see some spending come back temporarily. But if there is a short delay with the near-term outlook still left very uncertain, growth is likely to remain subdued beyond March.

Andrew Mountford, professor, Royal Holloway

In addition to the actual costs of any Brexit in disrupting supply chains (as in eg. Baldwin) and in reducing the attraction of the UK for potential investors by being distanced from one of the world’s major single markets and unified regulatory structure, the costs of uncertainty will continue to depress investment and increase costs as described above until the uncertainty is resolved.

Simply passing the current proposed deal will not resolve this uncertainty. It will simply start the process of trade negotiations which will undoubtedly be volatile and likely long lasting. The same thing applies to a no-deal outcome. Even a new referendum which stops Brexit will not completely remove the uncertainty, although one would imagine only a knife-edge result wouldn’t settle the issue for the immediate future.

The extent of these costs to the UK economy is difficult to gauge but the decline in the value of the pound of 15 per cent gives an indication that they are substantial. Foreign exchange dealers expect there to be such a reduction in the demand for pounds in the future from people wishing to invest in the UK economy or buy UK goods that they think sterling is worth only 85 per cent of what it used to be.

This 15 per cent decline will be an average over future possible paths. I would expect a no-deal outcome to cause a further substantial decline in sterling and a cancelling of Brexit to cause an appreciation of sterling but not of 15 per cent, as some of the disruptive effects of the Brexit process will have had permanent effects.

Jacob Nell, chief UK economist, Morgan Stanley

In our base case of a last-minute soft Brexit, we expect Brexit uncertainty to weigh on economic activity at the start of the year. However, once a hard Brexit is ruled out and the UK is firmly on the path of a soft Brexit — probably from Q2 2019 — we expect a rebound, led by stronger business investment. However, we expect the rebound to be modest, given ongoing uncertainty over the future EU-UK relationship, and peg GDP growth at 1.3 per cent over 2019 as a whole. In our bear case of a temporary transition, with the lingering risk of hard Brexit, we would expect a weaker growth recovery after Brexit. In our bull case of a very soft Brexit or remaining in the EU, we would expect clarity later in the year, but then a stronger recovery. Our previous bear case was a no-deal Brexit, but we now see this scenario as low probability (only 5 per cent), given a parliamentary majority opposed to a no-deal outcome.

Rain Newton-Smith, chief economist, CBI

Even if the Withdrawal Agreement is successfully ratified, Brexit and the nature of our future relationship with the EU will continue to affect business decisions. What matters most is what we determine to be our relationship over the long term.

Charles Nolan, professor, Glasgow university

It still remains far from clear what Brexit actually will mean. As such, it looks set to exert a depressive force across many sectors, softening business investment and further constraining productivity growth.

Andrew Oswald, professor of economics and behavioural science, Warwick university

Similarly to above. The additional possibility is that, if there is a very hard Brexit, confidence in the London housing market might deteriorate suddenly, as rich continentals flooded out of London. Our nation’s housebuyers have grown used to housing as a gloriously sublime one-way bet. If panic in the capital’s housing market were to set in by the winter of 2019, it is difficult to know where herd behaviour — down down rather than the usual up up — would eventually run out of puff.

David Owen, managing director and chief European economist, Jefferies

Obviously, the outlook could very different in a few weeks’ time, with the odds constantly evolving. We currently put the probability of “no deal” at 20 per cent (this includes after a second vote later in the year), 40 per cent parliament takes control (this includes remaining after a second vote, being parked in some form of EEA+, or revoking Article 50) and 40 per cent she gets her deal through. When thinking about the outlook for growth, monetary policy and sterling, we make use of weighted expected out-turns using the odds above. This suggests weaker growth than the consensus is expecting, higher rates and a weaker sterling. We do buy into the view that there could be a growth dividend if the uncertainty diminishes, but to the extent that more companies build inventories ahead of the event, these could be run down after March 29. And assuming the government wins the meaningful vote, attention will then switch more to the UK’s future trading relationship with the EU and rolling over FTAs with other countries.

Tej Parikh, senior economist, Institute of Directors

If a deal can be struck, it should deliver a short-term boost to business and consumer confidence. But economic activity will remain restrained by ongoing negotiations on the future trading relationship with the EU and weak productivity growth.

Ann Pettifor, director, policy research in macroeconomics

We can expect business investment to continue to decline, and for consumer and business confidence overall to weaken. A chaotic Brexit will feed into a UK economy already weakened by ongoing austerity, in which consumers and corporates are constrained by high levels of debt and households are running down their savings. A recession is therefore very likely.

John Philpott, The Jobs Economist

There is a Brexit-shaped hole in the economists’ crystal ball this year. Uncertainty surrounds the eventual divorce deal, let alone the demand and supply-side consequences of either a deal or no deal. The most one can realistically predict is that a no-deal Brexit risks short-term economic contraction, while agreement on any of the prominent deals currently under discussion (Plan May, Norway+, Canada+) offers the prospect of a short-term boost to growth as uncertainty subsides. However, an outcome I think possible is a political consensus in favour of rejecting no deal and instead extending Article 50 to allow for further consideration of alternative options, including a second referendum. If so, economic performance in 2019 is a repeat of 2018, with positive but modest growth.

Kallum Pickering, senior economist, Berenberg

All Brexit outcomes, ranging from the UK remaining in the EU to a damaging no-deal hard Brexit, are still possible. A softer Brexit would likely trigger a temporary acceleration in UK real GDP growth and limit the Brexit damage to long-term growth potential. An unmanaged no-deal hard Brexit would probably strike a severe short-term blow to UK and European economic activity and take a sizeable chunk out of the UK’s long-term growth potential.

Chances are, the UK will avoid a hard Brexit and the economy will improve in 2019. Just as the market consensus overestimated the extent to which the UK economy would soften after the Brexit vote, it is probably now underestimating the extent to which growth will pick up next year following a deal. Domestic fundamentals are in good shape. Driven by stronger consumption and business investment, UK real GDP growth can probably manage a rate close to 2 per cent in 2019.

Christopher Pissarides, professor, LSE

The effect will be mainly on investment and from there on growth, which should be affected, probably by a number close to 1 per cent but more likely 0.5 per cent. The effect will be bigger on exporting firms.

Jonathan Portes, professor of economics and public policy, King’s College, London

Assuming the worst-case (chaotic no deal) outcome does not materialise, uncertainty is likely to continue. That is, either Article 50 is extended or some version of the current deal is accepted, neither of which resolves the medium to long-term issues, but the current threat of a cliff-edge on March 29 is removed. This should improve confidence in the short term, but Brexit will continue to weigh on business investment for the foreseeable future. So while there might be a “relief bounce”, I wouldn’t expect a substantial “deal dividend”. No deal would almost certainly lead to a severe recession, although uncertainties are huge.

Vicky Pryce, chief economic adviser, Centre for Economics and Business Research

We are likely to see uncertainty prevail during the year. The chancellor has injected some money into the economy, particularly through raising personal allowances and the higher income tax threshold and offering some more investment incentives, and the OBR upping its forecast to 1.6 per cent for the year reflects this. But it assumes calmness ahead and a transition period to follow from exit from the EU at the end of March.

All this may be thrown into the air — everything is possible including an extension of Article 50, revoking of Article 50, a referendum, a general election, other options like an EEA. The probability of each of these options is difficult to assess at this stage but I would exclude a “no deal” as it will simply in my view not be allowed to go through against the will of parliament. However, as uncertainty is prolonged, businesses and consumers will sit on their hands or even retrench. The lack of investment will continue to affect the UK’s productivity, innovation and also long-term growth prospects. For both small and large firms alike, the intended tightening of immigration outlined in the immigration White Paper published just before Christmas will act as a further disincentive.

Sonali Punhani, UK economist, Credit Suisse

In 2019, the economic outlook depends on the path of Brexit negotiations. If the UK and EU agree on a deal, leading to a smooth Brexit and a transition period by March, risks are for growth to be higher than our forecast of 1.5 per cent. This is on the back of the fiscal stimulus announced in the Autumn Budget as well as a likely rebound in growth due to the deal being agreed.

Ricardo Reis, LSE

It depends on what type of Brexit it is. A resolution of uncertainty could boost the economy, as pent-up investment that was delayed in the past year or two finally gets off the ground. Moreover, a people’s vote that cancels Brexit entirely would likely give an important short-run boost to the economy.

Philip Rush, founder and chief economist, Heteronomics

Assuming, as I do, that the UK shifts into the agreed transitionary phase, nothing changes for the economy in 2019. Uncertainty about the ultimate trade deal and domestic politics will persist, but that merely means maintaining existing trends rather than breaking back higher or crashing lower. The UK’s representative consumer is apparently called BoB — thoroughly Bored of Brexit.

Yael Selfin, chief economist, KPMG

The impact of Brexit on the UK economy in 2019 will depend to a great deal on the type of exit the UK has. While prospects of a smaller and less internationally connected economy would depress business investment, the removal of uncertainty about the form of Brexit should see an acceleration in investment in the short term as government and businesses adjust.

Philip Shaw, chief economist, Investec

If a transition period is agreed promptly next year, this would probably give business investment a helping hand. A prompt and clear line of sight on a managed Brexit would in our view be non-disruptive to the economy in 2019. “No deal” would hit the economy, but the extent of the impact would depend on the precise shape of the trading arrangements — a common mistake is to consider no deal to be one scenario, whereas in reality the term hides a multitude of sins. A prolonged Article 50 extension risks the economy turning the UK into a chronic uncertainty zone, which becomes a place to avoid investing into. But non-Brexit factors should be considered too. The past two Budgets are about to inject a considerable amount of fiscal stimulus into the economy, while wage growth is picking up. On a base case view that a deal is agreed early in 2019, GDP growth should be stronger next year than this.

Andrew Simms, co-director, New Weather Institute

Obviously the effect of Brexit depends entirely on what actually happens to it, and whether it happens at all, making any confident, particular projections impossible. That said, this very uncertainty, almost inconceivable so close to the date set by the government to leave the EU in March, is a clear indication that the confidence fairy is unlikely to be sprinkling any magic dust over UK plc in the next 12 months. All the things typical of an economy gripped by a high level of uncertainty, therefore, are likely to characterise the UK.

Coyness by the government in publishing and being transparent about their own assessments of the economic impact on the UK’s future, glimpsed only dimly through this veil of doubt, is explained by what we do know. Brexit poses a kind of comprehensive uncertainty, because it implies fundamental realignment, rather than resulting from a single economic shock or geopolitical event. And, even “normal”, single source uncertainty is associated with falling investment, delayed decision making, negative employment effects and greater volatility in markets. Some of these patterns are already playing out with both UK investment abroad, and inward investment heading down.

So much, so bad, but potentially worse is how the all-consuming nature of the Brexit debacle has rendered government incapable of addressing urgent policy questions such as “future proofing”, by laying the foundations for a low carbon, resource efficient and high-employment UK economy.

Nina Skero, director and head of macroeconomics, CEBR

In the long term it is still unclear if Brexit will be net positive or negative for the UK economy. But in 2019, Brexit will be either bad or awful for the UK economy. There is about a one-in-four chance that the UK will leave the EU without a deal, meaning that the complete lack of clarity on post-Brexit arrangements will persist for longer. Business investment is set to be held to the bare minimum as firms wait for the situation to crystallise. Businesses have been stockpiling, boosting their inventories in preparation for a no-deal Brexit. Using up these inventories over the coming quarters will act as a further drag on growth in 2019.

Andrew Smithers, author

It depends on the outcome. The choices are May, Stay and Crash, with a second referendum as a possible way of deciding. Crash would I think have a marked negative impact on demand and would push up inflation. May would be positive through relief and Stay even more so.

Gary Styles, director, GPS Economics

For the first half of the year Brexit uncertainty is likely to be a significant drag on economic activity and confidence. Thereafter, any possibility of bounceback will largely depend on the nature of the final deal. With a clear decision from parliament and a reasonable degree of confidence that it will not unwind and output growth could look much stronger by the end of the year. However, if parliament moves towards another referendum or indeed more uncertainty the economy will suffer further setbacks in 2019 and 2020.

Suren Thiru, head of economics and business finance, British Chambers of Commerce

Persistent Brexit uncertainty is likely to mean a turbulent 2019 for the UK economy. The political and economic turbulence caused by uncertainty over Brexit is likely to weaken business confidence and the value of sterling further, dragging on key drivers of UK economic growth — notably business investment, consumer spending and trade.

The contribution of business investment to UK GDP growth is expected to remain downbeat as the increased uncertainty over Brexit weakens business and consumer confidence and stifles investment activity. Consumer spending is expected to be more limited as the weaker pound drives higher imported inflation over the near term, stifling real wage growth. A weakening currency is also expected to hinder rather than help the UK’s net trade position by increasing imported input costs, while a slowing global economy will limit export demand. Against this backdrop, the UK economy is likely to grow by about 1.3 per cent in 2019 — well below the historic average.

Phil Thornton, director, Clarity Economics

So much depends on the path that Brexit takes. Clearly May’s deal getting the green light will have a different impact from a no-deal exit, from a decision to have a second referendum, and from pushing for a Norway-style deal. But any outcome will mean greater uncertainty for consumers and businesses over the future shape of our relationship with the EU and so lower growth than the likely 1.3 per cent GDP growth for 2018.

Samuel Tombs, chief UK economist, Pantheon Macroeconomics

Considerable scope remains for business investment to rebound if a Brexit deal is signed off. The Withdrawal Agreement unlocks an 18-month no-change transition period with an option to extend it by two years in the likely event that a comprehensive trade deal has not been agreed by December 2020. Firms currently hold cash equal to 37 per cent of GDP on their balance sheets, up from 34 per cent since 2016. Not all of that extra cash will be spent, as firms also might not be investing due to the risk of a Corbyn government. But a hefty share of the cash likely will be deployed, given that margins are healthy, borrowing costs are low and capacity constraints are biting. Accordingly, we expect GDP growth to pick up to an average rate of 0.5 per cent in the final three quarters of 2019.

Kitty Ussher, economist and former Treasury minister

It will be the dominant story until the medium-term arrangements are resolved. This will affect market confidence. However, any effect on the real economy will be limited in the near-term as this uncertainty has already become a way of life — unless there is a no-deal Brexit, which will have an immediate effect on confidence and order books until clarity is achieved.

John Van Reenen, professor, MIT economics department and Sloan management school

It depends on what kind of outcome we see. A “no-deal” Brexit would be highly damaging as numerous reports have now shown, for example, the recent CEP/IFS report. But the important thing is to realise that ALL types of Brexit are economically and politically damaging to the UK (and to a lesser extent the rest of the EU). The government itself has recognised this and the impact is spelt out in my earlier work.

If the UK is in a transition period following the Withdrawal Agreement, the impact will not yet have fully played out because the real damage comes if the UK leaves the single market and customs union, which is potentially after the transition period ends. So if May’s deal gets through, then although there will be losses from uncertainty and expectations of being poorer in the future, the main damage is still to come.

Konstantinos Venetis, senior economist, TS Lombard

The big picture is that of an economy transitioning to a lower-growth equilibrium, marked by deficient domestic demand. Political instability only makes matters worse: the longer it persists, the bigger the drag on economic activity and the higher the likelihood of a sterling-induced jump in inflation.

Daniel Vernazza, chief UK and senior global economist, UniCredit

Assuming an orderly Brexit, the immediate Brexit cliff-edge risks around March 29, 2019, will be avoided, and the associated reduction in near-term uncertainty should lead to some pick-up in business investment after firms delayed decisions in 2018 over Brexit. With zero spare capacity in the UK economy, GDP growth will be limited by its potential of around 1.5 per cent (reduced partly as a result of Brexit).

In the unlikely event of a “no deal, no transition” Brexit, UK GDP would fall sharply, the magnitude of which is impossible to estimate precisely. Neither side is prepared for “no deal”. There would be stoppages and significant delays unless customs checks were not enforced and there were “grandfathering” of the required regulatory licences. Inflation would rise because of a fall in the value of sterling, supply bottlenecks and, if the UK were to choose a WTO tariff schedule similar to that of the current EU schedule, higher tariffs.

Keith Wade, chief economist, Schroders

Assuming that an agreement is reached then the economy should begin to grow again as delayed expenditure comes through. Otherwise, there will be more weakness which would be potentially severe in the event of a hard Brexit where there could be considerable dislocation to trade and supply chains.

Martin Weale, professor, King’s College

That of course depends how Brexit turns out. If there is a third referendum, there will be a great deal of uncertainty ahead of the vote, and a vote to leave with no deal would be likely to be damaging, as would of course leaving with no deal without a new vote. The most favourable outcome in economic terms would be a clear Remain majority in a third referendum. Even then, with the economy at capacity and productivity growth slow, we should not expect growth of more than 1 per cent to 1.5 per cent.

Simon Wells, chief European economist, HSBC

If or when more near-term clarity emerges, two judgments need to be made: how quickly will business investment rise and will the fall in inward migration accelerate? The former will probably be modest as long-term uncertainty will remain. If immigration continues to fall in a tight labour market, we could see faster wage growth and, in turn, a more hawkish Bank of England.

Peter Westaway, chief economist, Vanguard Asset Management

The performance of the UK will be largely determined by the outcome of the Brexit shenanigans in parliament. In my view, the most likely outcome (at around 70 per cent probability) is either some kind of compromise deal of the Theresa May variety, perhaps a close cousin, or maybe even a Norway-type soft Brexit. Next most likely is the cancellation of Brexit altogether (at 25 per cent probability). Any kind of deal will probably result in a rally in markets and an improvement in consumer sentiment. A reversal of Brexit would cause an even bigger surge, augmented by rising real incomes as real disposable incomes rose following a sharp increase in sterling. Any of those scenarios would lead to a much stronger prospect for UK growth in the second half of 2019 compared with the current consensus, perhaps as strong as 2 per cent. Only in the disastrous but rather unlikely no-deal scenario (at less than 10 per cent probability) would the pessimistic recessionary forecasts come to pass.

Matthew Whittaker, deputy director, Resolution Foundation

The big unknown! Much will of course rest on what Brexit means come March 29. A no-deal exit would almost certainly spark a disruptive recession, and we must hope that the prospect of this is enough to ensure that political pragmatism wins out. Brexit in line with the PM’s deal carries its own uncertainties, but it will at least provide a baseline against which businesses can start planning. With activity having been somewhat subdued over recent months, we might even enjoy a mild “rebound” of sorts. And with firms facing tightened labour supply — both because of low unemployment and more restricted access to EU migrant workers — we must hope that it serves as a tipping point for investment. But more likely it will act as a headwind, as firms spend time working out “what next?” and continue to tread carefully against a backdrop of continued uncertainty.

Mike Wickens, professor, University of York

There are two crucial factors: the short-term disruption due to a no deal and the longer-term uncertainty until the final arrangements are clear. But the downsides are unlikely to be as bad as the Bank’s scenario assessments or the Treasury’s forecasts, which are very unlikely to be near the mark — like their earlier assessments which were based on a flawed set of assumptions and incompetent econometric analysis.

Trevor Williams, visiting professor, University of Derby

Negatively and the more the UK leaves without a deal the greater the impact. In a no-deal scenario the UK economy will shrink, by as much as 2 per cent. In a deal scenario then the UK economy could expand by 1 per cent. There is a supply-side hit to investment and from lower migration and a bit to demand from consumers cutting back on spending and saving more.

Alastair Winter, chief economist, Daniel Stewart & Company

Quarter one already looks set to be soft in respect of all the components of GDP (0.3 per cent quarter on quarter), except perhaps a flurry of spending on contingency plans by both the government and business. The increasing prospect of remaining in the EU should release pent-up domestic and foreign business and investment as the year progresses and consumers may well start to increase their spending, especially if house prices start to turn around. “No deal” is most unlikely but if stumbled into would almost certainly cause a recession lasting into 2020.

Garry Young, NIESR

This obviously depends on how the UK actually leaves the EU, if it does. A plausible central expectation is that we leave roughly on the terms agreed by the prime minister with the EU. The effect of that on the economy in 2019 will depend critically on whether it ends the uncertainty surrounding Brexit. There has to be a concern that the unpopularity of the proposed deal and the apparent lack of political support for it will mean that uncertainty persists and the economy continues to limp along at its recent lacklustre pace. That will be much better than leaving with no deal, especially if that is disorderly. The best but unlikely outcome for the economy in my view would be for a convincing political consensus to build around a soft Brexit that resolves the current crisis, thereby ending the uncertainty and allowing government and business to get on with other pressing issues.

Linda Yueh, adjunct professor of economics, London Business School

Brexit will affect the UK economy through investment, consumption and government spending. In the first quarter and potentially first half of the year if Brexit day is delayed, uncertainty and contingency planning will affect investment as described in my previous answer. In the second half of the year, uncertainty over the future trade relationship will probably still affect long-term investment decisions. Consumption is also likely to be affected. Consumer decisions, particularly with respect to larger items, are influenced by how confident they feel about their economic prospects, which depends to some extent on Brexit. Finally, government spending will probably rise as departments increasingly take over functions such as trade policy that had been done by the EU.

Azad Zangana, senior economist, Schroders

We expect a poor start to the year due to Brexit uncertainty. Assuming the UK leaves the EU with a transition period, then we forecast the economy to rebound from the second quarter. There is a significant amount of pent-up demand, especially among corporates which have delayed investment and projects. We forecast GDP to pick up to 1.4 per cent in 2019. However, without a Brexit deal and a transition period, the economy could go into recession.

Name withheld

I expect little or no investment in the coming months (except for investment that prepares for contingent outcomes). Housing will probably pick up after a resolution, though it will depend on which is the outcome. If there is a hard Brexit, things might start to look ugly with logistics problems and shortages.

After a long squeeze, real wages are finally rising. Will households feel better off at the end of 2019?

Howard Archer, chief economic adviser, EY ITEM Club

Modestly, but not hugely. There is likely to be a modest further pick-up in earnings growth following improvement in the latter months of 2018, while inflation is likely to fall back further in 2019 helped by the recent sharp falling back in oil prices (we see consumer price inflation averaging 1.8 per cent in 2019, down from 2.5 per cent in 2018).

Earnings growth has seen a pick-up in the latter months of 2018, although it is still relatively muted compared to long-term norms (both headline and regular annual earnings growth was 3.2 per cent in the three months to October, the highest for a decade). We expect to see only limited further gains in earnings growth despite the tight labour market. Firms remain generally keen to limit their total costs in a challenging and uncertain environment. Fragile consumer confidence will probably deter workers from pushing hard for markedly increased pay rises despite recent higher inflation and a tight labour market.

While survey evidence indicates that labour market tightness is pushing up starting salaries and pay for people switching jobs, other surveys indicate that employers currently appear to be still only offering modest pay increases for their existing staff.

Nicholas Barr, professor of public economics, LSE

On average yes, in terms of real income. However, given the variance of outcomes, not all households will be better off in terms of real purchasing power, and feeling better off depends on perceptions as well as reality. Thus the effect is likely to be limited and patchy.

Ray Barrell, professor, Brunel university

Probably consumers will feel worse off, but that depends on the Brexit deal. We must not rule out stubborn-headed idiocy making consumers significantly poorer in a zero tariff no-deal exit. They can only guarantee to have a good chance of feeling better off if we stay in Europe.

Marian Bell, Alpha Economics

Voir au dessus.

Neil Blake, global head of forecasting, CBRE

Rising real wages are offsetting the impact of rising debt. If interest rates rise they will more than offset the impact of rising real wages.

Danny Blanchflower, professor, Dartmouth College

Better off than when is the question. Real wages in 2019 are still 5 per cent less than they were in Feb 2008, so the small rise in real wages will not be enough to make them fell better. And if there is further Brexit, slowing real wages will fall further as unemployment and inflation both rise.

Nick Bosanquet, professor of health policy, Imperial College

Not a big enough increase and for families much will be taken by rising council tax. By the middle of the year there will be anxiety about job losses and rising unemployment. Household confidence will be lower at the end of the year as a 3 to 5-year period of low growth kicks in.

George Buckley, Nomura

Oui. Inflation is likely to fall further thanks to lower oil prices and wage growth could accelerate due to the UK having the tightest labour market among its peer group (based on OECD estimates of the equilibrium unemployment rate). Employment, however, may not increase at the same strong rates as in the past given already-high participation rates. So aggregate incomes may not rise as quickly as real wages do. There is also a risk, in the case of a dramatic Brexit, of GDP falling and unemployment rising.

Sarah Carlson, Moody’s Investors Service

The UK’s productivity growth remains weak, and without an upturn in productivity a sustained increase in real wages is unlikely.

Jagjit Chadha, NIESR

The annual rate of increase in real wages, although material at 1 per cent per annum, is not really sufficient to leave the average household feeling that much better off. The recent buoyancy in consumption has been accompanied by a dwindling savings ratio and increased unsecured debt. Overall household debt at some 125 per cent of GDP suggests that households have been maintaining consumption levels by borrowing from a richer future. So even if that arrives, one should expect households to pay off some debt rather than increase consumption. The fundamental key to wealth and feeling significantly better off is a sustained improvement in labour productivity.

David Cobham, professor, Heriot-Watt University

This seems unlikely: a) sterling depreciation and inflation may work more or less strongly in the opposite direction; b) there will be a lot of households that won’t experience a genuine rise in their real wages; c) there will be a lot of households that still remember the (much) better times 10 years ago.

Brian Coulton, chief economist, Fitch Ratings

In the event of a smooth transition there should be some relief on the real wage front. But consumer debt levels have increased quite a bit in the past few years and household financial balances (savings minus investments) have moved into an unprecedented deficit. This limits the scope for a consumer rebound even if incomes pick up.

Diane Coyle, Bennett professor of public policy, University of Cambridge

Not in general, not unless there’s a political miracle. Not to mention all the households on benefits and fixed incomes, the people needing food banks or sleeping rough. Large numbers of our fellow citizens are struggling.

Bronwyn Curtis, independent economist

Households are unlikely to feel better off at the end of 2019. Higher real wages will be driven by the shortage of foreign workers, not because UK businesses are doing well and hiring. On the expenditure side, mortgage rates won’t fall and food and transport prices will probably be higher. There is little room for optimism on house prices either, as these seem set for a further fall in 2019.

Howard Davies, chairman, RBS

A little, as long as petrol pump prices keep falling. But only if they spend the whole year in the UK!

Panicos Demetriades, professor of financial economics, University of Leicester

It all depends on the value of the pound which, in turn, depends on which of the three Brexit scenarios prevails in the end. Under a no-deal scenario, real wages will decline sharply in 2019 as the value of the pound will fall and inflation will increase, putting pressure on the Bank of England to raise rates. If there is a people’s vote and Remain prevails, the value of the pound will rise, inflation will be subdued and real wages will increase. There will be less pressure on the Bank of England to raise rates. Under the scenario of Britain leaving on 29 March under Mrs May’s deal — which seems to be the least likely at the moment — any change in real wages is likely to be small, on average, although the change in immigration rules can cause labour shortages in low-skilled professions that may result in a rise in real wages in some low-skilled jobs.

Wouter den Haan, professor, LSE

The sad thing about Brexit is that progress elsewhere will be overshadowed by dismay over the political chaos both in terms of Brexit having an actual negative effect on people’s economic situation and on people’s perception of their overall wellbeing.

Swati Dhingra, associate professor, LSE

No, the rise is too small to offset a slowdown in economic growth in the event of a Brexit deal that does not do much on the services front and results in increases in prices from higher trade barriers.

Peter Dixon, economist, Commerzbank

Not sure I would go that far. After all, consumer sentiment has weakened this year even though real wages and incomes are rising, and wealth-to-income ratios have held up. But house prices are softening and households appear to be circumspect in their spending patterns. Maybe if some of the Brexit-related uncertainty were to dissipate, things might improve, but I suspect that consumers will not be doing any cartwheels in 2019.

Noble Francis, economics director, Construction Products Association

Real wages are finally rising but only at 1 per cent and real wages remain lower than 10 years ago. Real wages fell throughout 2017 and households continue to suffer the lagged impacts of this. In 2018 Q3, households spent more than they earned for the eighth quarter in a row. What happens to households at the end of 2019 will be highly dependent upon the unemployment rate remaining historically low to ensure nominal wage growth and, just as importantly, what happens to inflation. In turn, these will be both be dependent on the type of Brexit we have.

Assuming a deal is agreed and passes through parliament, then we would expect the unemployment rate to remain at historic lows and for nominal wage growth of around 3.5 per cent. Assuming a deal, CPI inflation would still be expected to remain above the Bank of England’s target of 2.0 per cent and average 2.4 per cent due to a rise in energy prices after OPEC’s decision to cut production to push up oil prices. Overall, around 1 per cent growth in real wages and households feeling slightly better off. However, a no-deal scenario would be expected to lead to a significant rise in both unemployment and inflation, the latter due to a depreciation in sterling raising import prices, pushing down nominal wage growth and leading to falls in real wages, making households worse off.

Charles Goodhart, professor emeritus, LSE

Depending on the Brexit outcome, exchange rates may be very volatile, declining sharply on a no-deal outcome, but equally rising if we end up in Remain. In a small open economy, such as the UK, the movements in prices resulting from the Brexit exchange rate impact will dominate the effect of the increase in nominal wages. So, whether people will feel better or worse will depend largely on Brexit.

Andy Goodwin, associate director, Oxford Economics

We expect CPI inflation to drop back to around 1.5 per cent in H2 2019. And though we expect the recent acceleration in wage growth to peter out, we should see real wage growth of 1-1.5 per cent in 2019. While still some way short of pre-financial crisis norms, this should mean that many households feel better off by the end of next year. But it shouldn’t be forgotten that those households which rely on working age state benefits will endure another cash-terms freeze next year. Though real income growth should be stronger in 2019, we are sceptical that we will see faster consumer spending growth. This is due to the extent to which spending growth has been fuelled by credit over the past couple of years — we think that both the ability and desire of consumers to borrow is waning, so spending and income are likely to be more closely aligned moving forward.

Mark Gregory, chief economist, EY

Much depends on Brexit — an exit that is viewed negatively by the markets will hit the pound and drive up inflation, which will squeeze real incomes and corporate margins so limiting any pay rises. In this scenario, households will not feel better off, quite the opposite. With a more benign Brexit, there will be slightly more positive news for households but the middle of the distribution will continue to be squeezed as employers start to look to reduce their labour intensity, especially in sectors such as retail and logistics.

Ruth Gregory, Capital Economics

Households should have more money at their disposal next year. Wage growth appears to be finally embarking on a sustained recovery, reflecting the fact that there is very little spare capacity left in the labour market. The fading impact of sterling’s post-referendum drop and the recent fall in oil prices should push inflation back to the 2 per cent target by the end of this year. Meanwhile, solid employment growth should continue to support households’ real incomes. However, a no-deal Brexit could knock 1 to 3 percentage points off consumer spending growth next year. Sentiment would be hit and a drop in the pound and tariffs on EU imports would put renewed pressure on inflation. Meanwhile, any acceleration in pay growth could be kept in check by the impact of weaker activity on unemployment.

Rebecca Harding, chief executive, Coriolis Technologies

It is unlikely that households will feel significantly better off by the end of 2019. This is because feeling better off is not just a function of real wages. Based on ONS data, the average household spends £554.21 a month. A simple back-of-the envelope calculation aggregates this to a net annual income of £28,828 per year or a gross income of around £37,000 at current rates of tax, national insurance and pension contributions. While this is not a precise number, it serves to make a point. Average annual salaries are, gross, £27,000. The gap between what households spend and what they receive in income is too broad to bridge with modestly rising real wages. Whether 2019 is dominated by uncertainty or by a no-deal and disorderly Brexit, the fact is that the current political gridlock is a material downside risk to demand and investment that will outweigh the effects of rising wages and potentially widen the gap between spending and income.

John Hawksworth, chief economist, PwC

If there is a reasonably smooth Brexit, then we would expect moderate but positive real household disposable income growth in 2019, due both to higher real wages and to the effective income tax cuts due from April because of increased personal allowances and thresholds. But if there is a disorderly Brexit, any such positive effects would be likely to be offset by a probable rise in unemployment and a squeeze on real incomes from a likely large fall in the pound, pushing up import prices.

Brian Hilliard, chief UK economist, Société Générale

Yes, but only if a Brexit deal is done.

Paul Hollingsworth, UK economist, BNP Paribas

The worst for the UK consumer has probably now passed, so long as a no-deal Brexit is avoided. A pick-up in real wages has been a long-held expectation of many economists, but it is finally happening. We think this trend should continue as the tight labour market delivers a further pick-up in wages, whilst inflation drifts lower, reflecting the fall in oil prices at the end of 2018. Of course, whether households “feel” better off depends on numerous other factors as well, such as the state of the housing market, which remains very weak, and the outlook for the economy, on which consumers remain very pessimistic.

Ethan Ilzetzki, lecturer, LSE

UK labour markets are tight and real wages will probably continue increasing in 2019.

Dhaval Joshi, chief European strategist, BCA Research

Yes, households will feel better off at the end of 2019, but only if the UK avoids a no-deal Brexit! The reason is that following the recent collapse in the oil price, inflation is going to plunge in the first half of 2019. And this is set to boost real wages even further.

Stephen King, senior economic adviser, HSBC

It depends partly on what happens to sterling — and sterling’s future rests partly with Brexit. In the event of a soft Brexit — or, indeed, a second referendum that reversed the original decision — sterling would likely appreciate, driving headline inflation lower with a positive effect on real wages. In a hard Brexit scenario, sterling would likely fall — possibly a long way — pushing inflation higher and thus threatening real wages.

Ashwin Kumar, chief economist, Joseph Rowntree Foundation

Yes average wages are finally rising in real terms, but household incomes will show a mixed picture. Those on the minimum wage will see decent increases in pre-tax earnings. However, many lower earners will continue to have to cope with fake self-employment and other forms of casualisation that put downward pressure on wages. Meanwhile, families on low incomes — both in and out of work — will still face the benefit freeze. On top of that, the impact of the two-child limit for benefits and tax credits will gradually increase, meaning that household incomes at the bottom will not share equally in improvements.

Ruth Lea, economic adviser, Arbuthnot Banking Group

Average earnings in real terms have been picking up slowly for much of this year (2018), after falling back in 2017, reaching annual growth of around 1 per cent in the 3 months to October 2018. If this continues through 2019, which is quite possible given the tight state of the labour market, then households, as a block, should feel a tad better off by end-2019. I do, however, doubt whether such modest real terms increases will have much impact on households’ “wellbeing”.

This analysis assumes that the pound does not depreciate significantly after Brexit and inflation stays relatively subdued in 2019, thus enabling real terms earnings growth to continue.

Inevitably, some households will fare better than others. Indeed, according to the ONS, those in “continuous employment” have tended to experience higher real earnings growth since the Great Recession than the crude aggregate series suggests. One problem with the aggregate data are that their average is affected by compositional changes in employment. Higher-than-average growth in entry-level, low-paid jobs inevitably drags average earnings down — and hence drags down the growth in the average earnings.

John Llewellyn, Llewellyn Consulting

Again, that depends entirely on what happens re Brexit. Sterling will have a lot to do with it. A crash out and sterling will plummet, sharply reducing real incomes. A decision to remain would have the opposite effects.

Gerard Lyons, chief economic strategist, Netwealth

They probably will feel much as they do now, although at least the uncertainty over Brexit should have been lifted. I expect inflation to remain low, and thus there should be real wage growth, which should underpin confidence. Although the solid UK labour market and rising wage growth could underpin consumption, household spending may be soft in the early months of the year, with a near-term rise in savings. House prices may stagnate during 2019, and thus have a neutral impact on confidence, as they will still be expensive for those looking to buy.

Stephen Machin, professor, LSE

Real wages are up a bit, but this is very modest and nowhere near what was the norm before the financial crisis. Nominal wages have grown a little bit more and price inflation has started to drop a bit, but it needs to be stressed that real wage growth is still very weedy and therefore so is growth in living standards in real terms. Some groups are continuing to lose out a lot, especially those young people who do not have the Bank of Mum and Dad to bail them out and help get them on the housing ladder (as a consequence of the gains their parents achieved due to the big inequality increases of the 1980s and to a lesser extent the 1990s and early 2000s). There are big social mobility concerns for the future being stored up because of this.

Chris Martin, professor of economics, Bath university

If the UK enters a transition with the EU or remains, households may be [about] 1 per cent better off; but they probably will not feel it. If UK does not enter a transition, households will be up to 3 per cent worse off. To them, it will probably feel even worse than that.

Costas Milas, professor of finance, University of Liverpool

Unfortunately, all depends on Brexit-related uncertainty. Inflation will catch up with and even overtake nominal wage growth if a no-deal Brexit occurs. If, on the other hand, Mrs May and her government wrap up the whole Brexit-related saga quickly, I am fairly confident that a “Brexit dividend” effect will boost the earnings of workers, making them feel better off by the end of 2019.

David Miles, professor, Imperial College

A rise in real wages of, say, 1 to 2 per cent is hardly noticeable to most households.

Allan Monks, UK economist, JPMorgan

We expect household real labour income growth to average 2.6 per cent in 2019, as the combination of lower inflation, strengthening wage growth and continued job growth benefits incomes. The question is whether Brexit uncertainty will initially cause households to save rather than spend these income gains.

Andrew Mountford, professor, Royal Holloway

Over the short term, uncertainty over job security (not only from Brexit but a possible global recession) will dampen the benefit of real wage growth and so I wouldn’t expect a large increase in household spending to follow on from any real wage growth. It is important to realise that technological progress will still continue. Brexit doesn’t stop this happening, it just means that the UK will benefit less than it otherwise would have done — average growth will be 1.5 per cent instead of 2 per cent, an effect which will only become clear as it cumulates (such a difference in growth rates implies the UK will be 15 per cent less better off than it would have been after a couple for decades, ie something that will slowly become noticeable).

Jacob Nell, chief UK economist, Morgan Stanley

We are bullish on pay growth, given the tight labour market, and expect it to rise to above 3.5 per cent in H2 2019. With inflation holding around the 2 per cent target, this implies positive real pay growth throughout our forecast horizon — so households should feel better off. However, consumer spending will grow more slowly next year we think, since we also see a pick-up in savings, with another jump in pension contributions under auto-enrolment in April 2019, and weaker growth in borrowing. In aggregate, this implies household spending in line with real income growth, rather than running above it. We therefore forecast that consumption growth will weaken modestly over 2019 as a whole, although we expect the low point for consumption will be in 1Q-19 and anticipate a modest recovery in household spending from 2Q-19 onwards, once the UK is firmly on the path to a soft Brexit.

Rain Newton-Smith, chief economist, CBI

Unless we have a no-deal Brexit, households should finally see some respite in living standards over course of next year. Inflation is likely to continue falling gradually as the impact of the post-referendum fall in the pound continues to fade. A tight labour market will also push wage growth higher, so that real earnings will stretch that little bit further. Households will feel a bit better off, not a step change. However, we expect productivity growth to remain continually weak, which will hold back any acceleration in wage growth and continue to cast a long shadow over living standards. But if we have a no-deal Brexit, households will really feel the pinch. We’d likely see much higher inflation on the drop of weaker sterling, and a significant squeeze again on incomes. Coupled with rising unemployment, it would be a really tough year for business and households alike.

Charles Nolan, professor, Glasgow university

Not much, if at all. Productivity growth needs to be more widespread and more robust . . . and Brexit, blah-blah!

Andrew Oswald, professor of economics and behavioural science, Warwick university

Apart from background uncertainties caused by Brexit, it seems likely that they will. But a hard Brexit’s consequences are not forecastable in any precise way. We haven’t practised this as a country.

David Owen, managing director and chief European economist, Jefferies

As in much of Europe and the US, the Phillips curve is kicking in with wages accelerating, so yes many households may see the benefit of higher real earnings. However, 2019 will be a year of heightened uncertainty. House prices may continue to adjust relative to incomes, and there will be a focus on raising longer-term savings. In a hard Brexit scenario a lot of people could end 2019 feeling significantly worse off.

Tej Parikh, senior economist, Institute of Directors

With wages slowly rising and inflation trending down toward the 2 per cent target, households will experience a boost to their wallets in 2019. That said, significant growth in pay packets will remain limited by high business costs and ongoing productivity challenges.

Ann Pettifor, director, Policy Research in Macroeconomics

No, the rise in real wages to date is marginal and average real wages are still below their level ten years ago. Even if Brexit avoids a cliff edge, the UK’s future will remain uncertain with the transition, if there is one, due to expire in 2020, weakening consumer confidence.

John Philpott, The Jobs Economist

Once again, Brexit uncertainty makes it difficult to provide an answer. Assuming we avoid no deal, the labour market should provide a boost to household incomes with employment remaining high and annual nominal wage growth of around 3 per cent. What happens to real incomes will then in turn depend on whether consumer price inflation returns to target without need for a further rise in Bank of England rates. The key factor here is growth in labour productivity and there is little evidence to suggest a breakthrough improvement in 2019. The best that households can hope for in 2019 is thus another year of modest gains, even if life continues to feel like a constant financial struggle.

Kallum Pickering, senior economist, Berenberg

Yes, so long as a hard Brexit is avoided. Mismatched labour demand and labour supply will continue to widen in 2019. Real wage growth is likely to accelerate to about 1.5 per cent as nominal wage growth rises above 3.5 per cent and headline inflation trends towards 2 per cent by H2 2019.

Christopher Pissarides, professor, LSE

They might end up with a more healthy bank balance but Brexit-related uncertainty and the necessary re-adjustment — such as taking longer to cross the channel or take a flight to an EU country, not finding as easily the European goods they are accustomed to buying, some higher prices as a result of excess administrative burdens on firms, a depreciated pound, etc — will take away any gloss. Altogether they will feel worse off, even if there is more money in the bank.

Jonathan Portes, professor of economics and public policy, King’s College, London

Since the Brexit referendum, real wages have risen by just over 1 per cent; in the two years before the referendum they rose by about 3.5 per cent. From the 1950s to 2008, they typically rose 1.5 per cent or so annually. So by any standards, real wage growth remains anaemic, particularly given low unemployment. Given Brexit uncertainties, as well as the slowing global outlook, I wouldn’t expect real wage growth to be particularly impressive by historical standards any time soon.

Vicky Pryce, chief economic adviser, Centre for Economics and Business Research

Wages are rising above inflation after many quarters of falling behind when prices shot up due to the fall in the exchange rate after the referendum vote. Inflation has now eased and that should in theory make consumers more willing to spend. But wages are only growing by some 1 per cent in real terms and recent surveys show a sharp fall in consumer confidence despite record employment levels. We are seeing that reflected in relatively poor retail sales and a service sector where activity in general is now more or less flat. Consumers had been encouraged to borrow on the back of record-low interest rates and the huge injection of liquidity as the Bank of England intervened to ensure funding was still available after the referendum vote. However, the new path to higher interest rates and the fall in house price growth are affecting consumers’ willingness to get even more deeply into debt. Many jobs remain insecure and relatively poorly paid and the continued welfare cuts are not likely to help much. It is therefore questionable whether one should really count on the consumer to be particularly supporting growth in 2019.

Sonali Punhani, UK economist, Credit Suisse

The outlook for household consumption depends on whether these real wage gains are sustained (which depends on the path of Brexit negotiations) and behaviour of consumers. After responding to a real income shock after the 2016 referendum by lowering their savings rate, consumers could start to save rising real income growth instead of spending it. We suspect some of that might already be happening.

Ricardo Reis, LSE

It depends on how Brexit turns out. See the previous answers.

Philip Rush, founder and chief economist, Heteronomics

Real wage growth should gather a little extra pace in 2019, and that is likely to be spent. Such growth is never evenly spread, though, and the disgruntled are much louder than the modestly content, so I wouldn’t expect a cheery consumer to be part of the narrative even if it is in the data.

Yael Selfin, chief economist, KPMG

Assuming no major fall in sterling as a result of a difficult Brexit and a subsequent rise in inflation, consumers will enjoy a longer spell of rising real wages by the end of 2019 which, coupled with rising vacancies numbers, should make them feel financially more secure. A more fragile housing market and a volatile equity market may offset some of that.

Philip Shaw, chief economist, Investec

Oui. We are not convinced that pay growth will go through the roof, but tight labour markets are beginning to result in firmer wage trends in a number of developed economies. A pace of earnings growth close to 3.5 per cent seems perfectly realistic, while inflation may drift below the 2 per cent target towards the end of the year if sterling recovers, as we expect.

Andrew Simms, co-director, New Weather Institute

The latest quarterly figures actually show real wages looking fairly stagnant, while households run down savings and rack up debt to maintain spending. Given the broader economic impacts of prevailing uncertainty, it is hard to imagine households feeling better off by the end of 2019. We need to remember also the ongoing, if increasingly overlooked, impact on local realities of government spending measures set under the shadow of self-imposed austerity. Even if real wages had continued to rise, loss of services and the divisive politics of Brexit, not to mention the long shadow of the “hostile environment” policy, are likely to wipeout any minor potential feel-good factors. In terms of the reduced availability and quality of a wide range of services — from libraries, to youth, care and sports’ services — that help determine how households “feel”, these effects are real, attritional and corrosive.

Nina Skero, director and head of macroeconomics, CEBR

It is unlikely that 2019 will be a good year for households despite the pick-up in wage growth. CEBR expects the pound to weaken further throughout the year, pushing up inflation and eating away some of the wage gains. CEBR’s work with retailers and debt charities has convinced us that debt anxiety is likely to be an important factor conditioning consumer spending in 2019.

Andrew Smithers, author

No. The trend growth rate of the UK economy is only around 1 per cent per annum.

Gary Styles, director, GPS Economics

I expect households will at best only feel slightly better off. The balance of risks is that inflation will surprise on the upside.

Suren Thiru, head of economics and business finance, British Chambers of Commerce

Real wage growth is likely remain relatively subdued in 2019 as sluggish productivity, high upfront costs for businesses and Brexit uncertainty combine to limit pay settlements. While average earnings growth will continue to outstrip inflation, the gap between pay and price growth is likely to be insufficient to drive material improvement in household finances, particularly given current debt levels.

Phil Thornton, director, Clarity Economics

Households are unlikely to “feel” better off — but that is because of the impact of Brexit. If the question is whether they “will” be better off, then it is a mixed picture. If real wages (wage growth minus inflation) continues to rise then the employed on average will have more money in their pocket. The chancellor talked about ending austerity and to some extent that will be borne out. The increases to the personal allowance and higher-rate threshold will benefit those at the middle to higher end of the wage ladder but not those at the bottom. Changes to universal credit (improvements to allowances for children and disabled family members and the rate for deductions) will leave poorer households less worse off. But government grant funding for local services delivered by local councils will be cut by £1.3bn (36 per cent) in 2019/20, which will directly impact the less well off.

Samuel Tombs, chief UK economist, Pantheon Macroeconomics

We expect year-over-year growth in nominal wages to stabilise at about 3 per cent, rather than carry on rising. Although unemployment is very low, employers still can draw on under-utilised self-employed and part-time workers to fill positions. In addition, labour supply will be boosted in 2019 by increases in the state pension age. The fall in inflation over the past year will bear down on pay settlements, while NHS workers will receive a smaller rise than in 2018. Nonetheless, the outlook for below-target inflation throughout 2019 suggests that real wages will rise by about 1.2 per cent in 2019, the biggest increase since 2016. Meanwhile, substantial increases in the personal allowance and higher-rate threshold for income tax will boost disposable incomes in April.

Kitty Ussher, economist and former Treasury minister

On average, yes. People employed by firms exporting to the EU, however, may feel less secure depending on what parliament decides.

John Van Reenen, professor, MIT economics department and Sloan management school

The increases in real wages remain small. The performance of pay in the UK has been atrocious since the financial crisis, the worst since at least the Great Depression. Poor productivity growth is at the root of this and Brexit will make this worse. Populist anger has festered due to this. In retrospect, it is now clear that the premature excessive austerity (particularly 2010-12) is part of the reason for our current economic and political malaise. So unless there is a new vote to Remain, households will feel worse off at the end of 2019.

Konstantinos Venetis, senior economist, TS Lombard

The “flow” (real incomes) has improved but the “stock” (household finances) is vulnerable, keeping consumer confidence down and saving intentions elevated against a backdrop of heightened political uncertainty. At this juncture, the scope for further acceleration in wage growth looks limited. The surveys point to employment intentions losing steam and the level of settlements (about 2.5 per cent year-on-year) is somewhat low, so a period of consolidation around 3 per cent is likely. Annual real growth in households’ broad money balances continues to flatline around zero, evidence that the tailwind to spending from faster earnings growth is muted by the inevitable slowdown in job creation, weaker consumer credit expansion and a negative wealth effect from the cooling property market.

Daniel Vernazza, chief UK and senior global economist, UniCredit

Probably not, even if Brexit is orderly, for several reasons. First, ultimately Brexit is likely to lead to a less open, and hence less productive, UK economy. This will require a downward adjustment of real incomes to the new, lower potential growth. Also, heightened uncertainty is likely to persist as negotiations on a future trade deal begin in earnest. Second, the global economy is likely to be less supportive in 2019 than it was in 2018 due to trade tensions, tighter global financial conditions, heightened macro uncertainty, a fading US fiscal stimulus, and an ongoing slowdown in China.

The main source of relief for UK households in the short term will be the large fall in oil prices, while an orderly exit from the EU is likely to lead to an appreciation of sterling and an easing of inflationary pressure next year, but it’s unlikely to be enough to offset the forces mentioned above for the development of real incomes.

Keith Wade, chief economist, Schroders

Yes, although this could be tempered by weakness in the housing market, which has begun to correct.

Martin Weale, professor, King’s College

Oui. The high demand for labour means that wages are likely to remain buoyant. Wage growth may well accelerate to 4 per cent per annum by the end of the year. I have been saying that for a long time and it may turn out to be true eventually.

Simon Wells, chief European economist, HSBC

Real incomes should rise modestly but people are unlikely to “feel” much better. Savings rates are very low, the housing market is weak and financial conditions have tightened a bit. A rapid rise in consumer confidence seems unlikely.

Peter Westaway, chief economist, Vanguard Asset Management

With sterling more likely to rally on the back of a Brexit deal or the reversal of Brexit, real incomes should be boosted by falling import prices, an effect magnified by the impact of lower oil prices feeding through into consumer prices. As a result, UK consumers should start to feel better off as 2019 progresses. If productivity begins to recover too, the dog that so far hasn’t barked, then income growth should be stronger still.

Matthew Whittaker, deputy director, Resolution Foundation

Oui. Short of a disruptive no deal Brexit, we can expect wage growth to be sustained through 2019. With employment at a record high, we might also hope for a more generalised improvement in job quality. However, there may be distinct differences across the earnings distribution. Average wage growth has been supported in the past two years by large increases in the wage floor, and we can expect to see that again in 2019. But the average has also been boosted by the re-emergence of strong wage growth at the very top of the distribution. If that pattern persists into 2019, then the headline rate will overstate the lived experience for the majority in the middle of the earnings distribution. Moving from earnings to wider incomes, lower income households must endure the final year of the four-year benefits freeze, implying that income inequality is likely to rise again in 2019. The continued — slow — transition to universal credit will create new difficulties for some too, reflecting the fact that the “simple” system too often fails to meet the variable needs of users’ real lives.

Mike Wickens, professor, University of York

No. The rise in wages is due to shortages of labour because of the effects of lower immigration. This mainly affects low-productivity jobs. A sustained higher level of real wages requires higher productivity — which results from higher capital/labour ratios that require higher investment. See my response to the first question.

Trevor Williams, visiting professor, University of Derby

No. Wage inflation cannot continue to rise as firms’ profit margins will be increasingly squeezed by higher labour costs, high materials costs as the currency slides and by uncertainty about demand. As the year wears on, wage growth will slow sharply back to the 2 per cent annual rate we have seen on average over the past five years. Money supply growth is slowing and suggests squeezed budgets for business and households.

Alastair Winter, chief economist, Daniel Stewart & Company

Oui! Once Brexit is sorted via Mrs May’s deal or straight remaining, consumer confidence will start returning. With inflation staying around 2 per cent thanks to flat oil prices and wages running at around 3 per cent, people will feel better off, especially in the public sector. Unemployment is unlikely to change much even if EU workers decide to stay in the UK after all.

Garry Young, NIESR

Hardly. Real wages are rising at a rate of about 1 per cent a year. That is welcome but it will take many years before people feel much better off.

Linda Yueh, adjunct professor of economics, London Business School

That will depend on wages continuing to rise. And that in turn will depend on productivity improving so that wage rises can be sustained as well as how well employers are prepared for a downturn in the business cycle. In other words, most US CFOs are expecting America to be in recession in 2019 or 2020 after growth peaked around mid-2018. The UK tends to fall within a similar business cycle as the US. So, it’s likely that the economy will be slowing in 2019. Coupled with the productivity challenge, wage growth may not grow very well towards the end of the year and will affect how households feel at the end of 2019.

Azad Zangana, senior economist, Schroders

Households should feel better as wages in real terms continue to accelerate. Employment growth is, however, forecast to slow as the economy reaches full employment. Consumption should improve in 2019, but not by much. This is because households have run down their savings rate to be able maintain spending patterns in 2018. The improvement in disposable income is expected to boost savings and pay down debt more than increase spending.

Name withheld

Préférablement pas. The slowdown from Brexit will take any optimism out.

How far will the government act in 2019 on its promise to end austerity?

Howard Archer, chief economic adviser, EY ITEM Club

Not very far. The chancellor has indicated that next year’s spending review will see annual average spending growth of 1.2 per cent in real terms. Mr. Hammond implied this could be just a taster of things to come, indicating that spending could rise more if a “Brexit dividend” comes from a smooth UK exit from the EU in March, which allows him to use up some of the £15.4bn fiscal buffer he has put aside and causes the OBR to raise its growth forecasts

We doubt that the chancellor will get much, if any, of a Brexit dividend in terms of growth forecast upgrades. And if he sticks to his current fiscal rules, his room for manoeuvre has been limited by the Office for National Statistics announcing that it will some time next year change its treatment of student loans in the public finances, which will add about £12bn to the budget deficit. On the face of it, this would wipe out the bulk of the £15.4bn headroom that the chancellor has against the fiscal mandate.

Nicholas Barr, professor of public economics, LSE

The government is very likely to fail to meet its fiscal targets because of costs associated with Brexit, eg preparation for no deal; and because lower growth will adversely affect tax revenues.

Ray Barrell, professor, Brunel university

Austerity will be much modified in the next few years. Austerity involved reducing the scale of government in the economy as well as reducing the budget deficit. Reducing the size of government has done a great deal of damage and the process can be stopped only with higher taxes or higher borrowing.

Marian Bell, Alpha Economics

A continued easing of fiscal policy may be necessitated by the Brexit-related negative economic impact this year. However, the implications for the UK economy of a hard Brexit will be to make the economy smaller and less able to fund public services in the long term.

Neil Blake, global head of forecasting, CBRE

Not as far as the bluster in the Budget speech implied. A Brexit hit to growth will hit the tax take and reverse the benefit from last year’s windfall.

Danny Blanchflower, professor, Dartmouth College

Unclear what they will do. Austerity has failed disastrously, generating the slowest recovery in 300 years, so it is about time as the next recession approaches. I have little faith that Hammond has any clue what to do in the face of a slowing economy.

Nick Bosanquet, professor of health policy, Imperial College

It will make some eye-catching changes for political effect, but total spend will be held constant at best. We will move into a new, much longer-term instalment of austerity as tax revenues are projected to fall, especially stamp duty on housing and high-rate tax payments by financial services staff.

George Buckley, Nomura

With the government having delivered a sizeable fiscal boost in the shape of additional NHS spending, we doubt that the chancellor will do much to alter his current plan to slowly reduce the deficit over time. That could change, depending on the nature of Brexit — a difficult departure could require fiscal stimulus on the one hand, but on the other makes it less affordable thanks to the impact that a Brexit-induced recession could have on the public finances. Base case: continued modest austerity with a pre-election boost in the early 2020s.

Sarah Carlson, Moody’s Investors Service

The chancellor’s 2019/20 Budget set out the largest discretionary fiscal loosening since 2010, and we think that he is likely to deliver a real increase in expenditures after next year’s spending review is concluded. However, the government’s decision to spend, rather than save, the better than expected fiscal results of the past year means that the UK sovereign has less ability to absorb a negative shock without having to increase debt.

Jagjit Chadha, NIESR

Total managed expenditure is now below its long-run level and there are areas of the public sector in need of investment: public infrastructure, education, health and transport. So it might be quite hard to rein in public expenditure further. The better way to limit the increase in public debt would be to consider a fundamental review of the tax system alongside the spending review pencilled in for next year. There are two aspects of fiscal policy, and insufficient attention has been given to reform of tax and revenue-raising rather than constraints on expenditure. One side point on the fiscal rule, if I may: the self-imposed rules have been regularly modified and I question whether they ought to be treated as a binding constraint or more as a target to be followed flexibly, as has been the case with the monetary policy rule for inflation. In recent institute work, we have shown that expenditure plans are regularly revised but may not reflect the correct response to the requirements of society in terms of current or capital expenditure. The targeted deficits, though proving some support to credibility, are not necessarily socially optimal.

David Cobham, professor, Heriot-Watt University

Very little. There is no sign that senior Tory politicians recognise that austerity has been a mistake (undertaken for essentially ideological reasons), and the economy will be weak enough to provide the justification for further postponement (at best).

Brian Coulton, chief economist, Fitch Ratings

Our latest forecasts for UK growth in 2019 — which for the purposes of our forecasts assume a smooth Brexit transition and avoidance of a cliff edge — incorporated a significant discretionary easing in fiscal policy, as announced in the autumn Budget. On that basis we made a minor upward revision to our baseline growth outlook. But of course with Brexit, the risks are skewed to the downside.

Diane Coyle, Bennett professor of public policy, University of Cambridge

It depends how bad the Brexit impact is, but in any case it will fall on those with least ability to weather it, and who have been worst affected by the significant shrinkage in public services. If things turn out as badly as I fear, I don’t think austerity will be politically sustainable.

Bronwyn Curtis, independent economist

Do we believe the government’s announcement in the October Budget that austerity is over? Tax revenues are unlikely to be higher going forward as some of the largest businesses and higher rate taxpayers have taken steps to limit their exposure to Brexit and moved assets abroad and there are now global headwinds to deal with.

The chancellor will have little wriggle room, but the political uncertainties will tip the balance towards loosening fiscal policy in 2019 even if there is “no Brexit”. The closer we are to a “no-deal Brexit”, the stronger the fiscal policy response will be.

Howard Davies, chairman, RBS

The government is not strong enough now to resist pressure to oil squeaky wheels. They are found across Whitehall: in the Ministry of Defence, in the Department for Transport, and especially the Department for Work and Pensions, where universal credit will cost far more to implement. If you add preparations for a no-deal Brexit, there will be an involuntary fiscal easing, driven by decibel planning rather than a considered view of where the shoe is pinching.

Panicos Demetriades, professor of financial economics, University of Leicester

This promise is optics, if not also cheap talk by a government with a short horizon. If somehow the government survives, the only way there will be an end to austerity is if in a people’s vote the UK votes to remain in the EU. The value of the pound will increase significantly in that scenario and the economy will revert to healthy growth rates. The UK will once again become more attractive to foreign investors and with healthier public finances, the government will be able to invest more in health and education.

Wouter den Haan, professor, LSE

Given the Brexit chaos, the government may very well be forced to implement an expansionary fiscal policy either because the potential of Brexit-related chaos will require immediate government spending or because voters’ dismay will induce political pressures to do so.

Swati Dhingra, LSE

It depends on the aftermath of the Brexit negotiations. If a slowdown happens quickly, it will put pressure on public finances, though the government does have room to end austerity. For example, borrowing costs have not been hit yet. The government is more likely to end austerity closer to an election.

Peter Dixon, economist, Commerzbank

While the government has committed to additional spending, a large chunk of it is destined for the NHS which, while a positive, does nothing for the other government departments that have been starved of funds for many years. The police and fire services, prisons and local authorities are not going to see an end to austerity. Moreover, although over the past eight years local authorities have been able to offset part of the 40 per cent reduction in centrally disbursed incomes through a rise in locally retained sources, local authority revenues are down 22 per cent in real terms — the sort of squeeze that people tend to notice in their day-to-day environment. With pre-announced welfare cuts yet to feed into the system, the end of austerity is not yet upon us. Most people are unlikely to notice much change in 2019 and we will need greater efforts from government before they are persuaded that change is happening.

Noble Francis, economics director, Construction Products Association

The UK government has a tendency to make major announcements but the reality on the ground rarely matches the announcements, particularly for the construction industry. Local authorities will remain financially constrained in the short term and medium term. There may well be some areas such as the NHS that experience increases in funding but an end to austerity is merely likely to mean that, at best, after eight years of austerity across central government and local government the cuts come to an end. It doesn’t mean that public sector spending will return to higher levels.

Charles Goodhart, professor emeritus, LSE

Political pressures will ensure that fiscal policy becomes modestly expansionary, irrespective of what else happens.

Andy Goodwin, associate director, Oxford Economics

Unless Brexit is disorderly, I would not expect to see a further loosening of the fiscal stance. The upcoming changes to the treatment of student loans are likely to wipe out a large chunk of the margin for error against the fiscal mandate, which will constrain the chancellor unless the public finances continue to improve faster than the OBR anticipates. Having said that, there is a reasonable chance that the chancellor will decide that it is time to update his fiscal rules. Because the fiscal mandate is judged with reference to a fixed date (2020-21), the horizon has become very short and it makes little sense as a benchmark for setting policy. The chancellor could move the reference date further out, which could also give him some extra flexibility around policy.

Mark Gregory, chief economist, EY

Cautiously, while the Brexit process remains ongoing and even when we have a clear way forward, I don’t expect much stimulus beyond what has already been announced.

Ruth Gregory, Capital Economics

Unless the UK leaves the EU in March without a deal, the fiscal picture for 2019 (and beyond) is likely to be considerably brighter than the Office for Budget Responsibility expects. It is possible that Mr Hammond (or whoever is the chancellor by then) may be able to both loosen the purse strings and meet the manifesto pledge to eliminate the budget deficit by the mid-2020s. If the UK were to leave the EU without a deal in March 2019, we think that the chancellor would sacrifice his fiscal rules if necessary in order to loosen fiscal policy. A giveaway of £20bn or so, or 1 per cent of GDP, would probably be enough to roughly offset the hit to GDP that we expect in the immediate aftermath of a “no deal” Brexit. Meanwhile, the advent of a Labour government would probably lead to slightly higher public sector borrowing than under the Conservatives’ plans. While this could result in a small fiscal boost, the benefits would probably be offset by the dent to private sector investment from Labour’s anti-business policies.

Rebecca Harding, chief executive, Coriolis Technologies

The government’s hands are tied in terms of its promise to end austerity. It has already committed £2bn to planning for a no-deal Brexit and Philip Hammond himself suggested in his autumn Budget that he would have to reverse the £30bn spending plans he laid out in the event of a disorderly no-deal exit from the EU on March 29. Unless the chancellor is willing to use his war chest to create a substantial fiscal boost to manage any severe downturn, the financial pressures of Brexit and the burgeoning problems for housing, the NHS and universal credit will continue to take a back seat.

John Hawksworth, chief economist, PwC

If there is a reasonably smooth Brexit, we would expect the government to proceed broadly on the lines outlined in the autumn 2018 Budget. This implies a significant easing of austerity over the next four to five years, but not a complete end to austerity in relation to welfare benefits and unprotected areas (ie other than health, overseas aid, defence and security). We don’t see much extra room for manoeuvre for the chancellor in 2019 even in this favourable Brexit scenario, bearing in mind also the significant reduction in the headroom available in meeting his 2020 fiscal target due to forthcoming (very sensible) changes in the way in which student loans are accounted for in the public finances. The chancellor could respond to this by relaxing his fiscal target, given this was based on previous accounting rules, but there could be costs to this in terms of the perceived credibility of fiscal policy. If there is a disorderly Brexit, we would expect significant short-term fiscal loosening to mitigate the economic pain. In the longer term, however, the budget deficit would be significantly higher in such a scenario and austerity would probably have to be resumed some years down the line to address this.

Brian Hilliard, chief UK economist, Société Générale

It will stick to its autumn Budget plans but that will not feel like the end of austerity for areas other than the NHS because they will see no real increase in spending when they need increases to reverse some of the damage done by years of ringfencing spending.

Paul Hollingsworth, UK economist, BNP Paribas

Fiscal policy will provide support to growth in 2019, but it would be hard to conclude that the government will put an end to austerity this year — unless Chancellor Hammond decides to scrap his fiscal rules.

Ethan Ilzetzki, lecturer, LSE

I am less optimistic relative to official projections on UK (and global) economic growth in 2019. I therefore expect that deficits will be larger than currently forecast. It is more difficult to forecast how the exchequer will react to such a shortfall. Political uncertainty is even higher than economic uncertainty. I am even uncertain whether the current parliament will be in place through December 2019.

Dhaval Joshi, chief European strategist, BCA Research

The end to austerity in the UK is highly conditional on the UK avoiding a no-deal Brexit, for two reasons: a no-deal Brexit would almost certainly hurt the health of government finances; also, a no-deal Brexit would demand the entire focus and energy of the government, leaving little scope for other policy initiatives.

Stephen King, HSBC

In health, a bit. Everywhere else, not much at all. There might be big corporation tax cuts in the event of a no-deal Brexit.

Ashwin Kumar, chief economist, Joseph Rowntree Foundation

In the short term, improving average real wages will reduce fiscal pressure but the elephant in the room is Brexit. A distant trading relationship with the EU will have negative economic consequences and increase fiscal pressure. It may be that the risk of such an eventuality constrains the government’s freedom to relax the purse strings to the extent that shorter-term trends allow.

However, this government will remain under political pressure as Brexit uncertainty continues. This will create more pressure for expenditure to alleviate some of the more severe consequences of previous policies. On balance, I think the political factors will dominate and so we may see some increased expenditure in areas where pressure is greatest.

Ruth Lea, economic adviser, Arbuthnot Banking Group

It all depends what is meant by austerity — a nebulous concept.

If overall public spending levels are considered, it is not necessarily obvious that there has been any “austerity” at all since 2010, such was the rapid growth in public spending during the 2000s, well outstripping GDP growth. The public spending/GDP ratio was around 34 to 35 per cent in the early 2000s, rising to more than 44 per cent in 2009 to 2010, before falling back to about 38 per cent at present (around the ratio of the mid-2000s). On this metric, what has happened to public expenditure since 2010 can be seen as a long-overdue correction to spending after the “profligacy” of the 2000s. After all, public spending has to be paid for — by the taxpayer.

Granted since 2010, some budgets have fared much better than others. For example, the “ringfenced” programmes (including health) have fared much better than non-ringfenced. Undoubtedly, some programmes (defence, public order, education) have experienced real terms cuts in their budgets since 2010, though, on the whole, even they have larger budgets (in real terms) than they did 20 years ago.

However, the “austerity” narrative seems to have become the “norm” and the government clearly feels the political need to be seen to be “ending austerity”. Again, it is not clear how exactly this is to be defined. One approach is to “make good” the real terms cuts experienced in the non-ringfenced public sector budgets since 2010. But this is just one approach, taking an arbitrary starting point.

The next step will be, of course, the 2019 spending review (date unknown) when the government will announce its plans to 2023-24. Assuming the current chancellor stays in position, I would expect a fairly hawkish settlement (except for the already announced NHS spending). If this is the case, many of those calling for an “end to austerity” will doubtless be disappointed.

Whereas those of us, who question much of the “austerity” narrative, will doubtless feel that “ending” anything as nebulous as “austerity” is an unwinnable political hostage to fortune.

John Llewellyn, Llewellyn Consulting

That depends on the economics and the politics. The NHS, the police and the defence forces have all been starved for a decade. Social and political pressures to reverse some of this are mounting. But the fiscal headroom will be limited by the nature of the Brexit outcome. Either way, any UK government is going to face enormous pressures over the next 20 years.

Gerard Lyons, chief economic strategist, Netwealth

The government has already indicated its broad plans in this area. The chancellor has already outlined the path of spending until 2023-24 and the details of that will be unveiled in the comprehensive spending review. While the headline figure suggests an end of austerity, the breakdown, as we already know, suggests that there will be little scope to boost spending in the previously non-ringfenced areas. Thus the pressure will remain on these. In recent years, the combination of steady growth in nominal GDP and continued low rates and yields has allowed favourable debt dynamics to reduce the budget deficit. This trend could continue, and if so, should allow the government more room for fiscal manoeuvre.

Stephen Machin, professor, LSE

Austerity has become politically very unpopular and so the government [must choose] between possible economic slowdown and being able to end austerity. The only thing that might save them here is that borrowing costs do not seem to have risen.

Chris Martin, professor of economics, Bath university

Oui. The need to get elected will trump everything.

Costas Milas, professor of finance, University of Liverpool

Assuming a Brexit deal takes place fairly quickly, the government will indeed act on its promise. If, on the other hand, political events lead to a Labour-led government, austerity will end much faster.

David Miles, professor, Imperial College

“Austerity” is too vague to mean much. So when it ends is hard to assess, when what it means is so unclear. If the question is will the government keep to its budget projections, the answer will depend on whether we get a year of very poor growth or not.

Allan Monks, UK economist, JPMorgan

Fiscal policy is projected to boost growth in 2019, but then return to a small net drag on growth in subsequent years. Barring an improvement in the UK’s sustainable growth rate, this means that austerity will have been paused rather than ended.

Andrew Mountford, professor, Royal Holloway

This is too big a topic to address in a few sentences but, since the financial crisis, the UK government debt has risen from about 35 per cent to about 85 per cent of UK GDP ie half of a year’s total production. This is a huge amount of resources that could have been spent improving the capacity and productivity of the UK economy for the future.

Jacob Nell, chief UK economist, Morgan Stanley

We expect a further moderate easing in fiscal policy, given the chancellor’s promise of a Brexit deal dividend, with the additional funds to be allocated in the 2019 spending review. We think this will end austerity from 2020, defined as real terms cuts in departmental budgets on average. However, with the majority of available resources already allocated to health, some departments will continue to face budgets which are falling in real terms.

Rain Newton-Smith, chief economist, CBI

We’re making progress on the road to the end of austerity but we’re not there yet. The chancellor will face some tough choices on spending next year. We’ll be keeping an eye out for what we invest in skills and in education, particularly for the crucial age group of 16 to 18-year-olds. We also need to think again about our approach to life-long learning.

Charles Nolan, professor, Glasgow university

It will probably have bigger fish to fry! Austerity will continue for quite a few years to come for many areas of public expenditure.

Andrew Oswald, professor of economics and behavioural science, Warwick university

Slightly.

David Owen, managing director and chief European economist, Jefferies

Again so much depends on Brexit. In a no-deal scenario, there will be a pressing need for a fiscal response. But, yes, we are coming to the end of austerity — quite right too. Focus should be much more on the many other important longer-term issues facing the economy.

Tej Parikh, senior economist, Institute of Directors

To remedy the damaging effects of a long period of uncertainty on businesses, the chancellor will be under significant pressure to deliver further cost reliefs and investment incentives to spur economic activity back into life.

Ann Pettifor, director, Policy Research in Macroeconomics

There is no real sign that the government intends to reverse austerity. While the Treasury might contribute some additional funding for the NHS to prevent the collapse of healthcare, this will not by itself end austerity. To do so would mean public spending increases of at least 2 per cent to 3 per cent of GDP to reverse the worst of the cuts in local government spending, including to education, police and social housing, as well as unfreezing benefits. The quality of life for UK citizens is likely to fall further

John Philpott, The Jobs Economist

I’m not sure if this promise amounts to anything more than political rhetoric. The mood music will yet again depend on the effect of Brexit on the public finances.

Kallum Pickering, senior economist, Berenberg

Not very far. Expect a little extra spending here and there that can lift medium-term demand a little but nothing that will alter the temperature of the economy much. Of course, any such boost is predicated on the UK avoiding a damaging no-deal hard Brexit.

Chris Pissarides, professor, LSE

I think they will do it, provided Philip Hammond remains chancellor, but they will do it in a Tory kind of way — don’t expect big social transfers.

Jonathan Portes, professor of economics and public policy, King’s College, London

The test of whether the government has made good its promise will be whether we see a real reversal in the rise in rough sleeping, demand for food banks, NHS waiting times and so on; levels of hardship for the most vulnerable in our society that would have been almost unimaginable a decade ago. My prediction would be that, assuming no change of government, we will see some rhetoric but little action: the government may reduce the scale of future cuts to some services, but will do very little to restore the very large and damaging cuts to disability and family benefits, social care, legal aid, justice, prisons and so on.

Vicky Pryce, chief economic adviser, Centre for Economics and Business Research

It remains to be seen whether we are really seeing an end to austerity. The new spending review, due to be conducted during 2019, will show how far this is just empty words and whether there is a reversal of the underlying cuts to local authorities and many non-core government departments. The hope is that there will be some rethink and as Brexit pressures mount there will be an attempt to move extra funding support to areas actually contributing positively to the economy. This will of course require willingness to borrow more. The measures in the late October budget that allowed a small relaxation in public spending this financial year and in 2019/20 and beyond such as in the NHS appeared “costless” as they followed the discovery of extra money by the ONS and the Office for Budget Responsibility in the form of better annual income tax and corporate tax receipts than had originally been assumed. But a lot of that is now eaten away by the higher than previously thought change in the way student loans now appear in public finances, raising the deficit. The question is whether the chancellor will be happy/able/willing to continue to borrow more to assist the economy. It is true that borrowing is already expected to be about £40bn more this fiscal year alone than had been assumed just before the referendum vote and some of the self-imposed fiscal rules have been abandoned as a result but markets have been happy to fund this. No reason why they shouldn’t be happy to continue to do so unless we have political paralysis due to Brexit uncertainty.

Sonali Punhani, UK economist, Credit Suisse

We think that the chancellor is likely to postpone the end of austerity until Brexit negotiations are over and the future path of the economy is clearer. The chancellor can [take advantage] of the deal dividend if a deal is struck with the EU due to better growth forecasts, a surge in business investment and the freeing up some of the Brexit war chest saved for a no-deal Brexit.

Ricardo Reis, LSE

That is a question about politics, not economics. Je ne sais pas.

Philip Rush, founder and chief economist, Heteronomics

It will finally be able to allocate the ringfenced funds that would otherwise be sent to the EU. Saving some of them and spending the rest on squeezed priorities would help it pass more definitions of ending austerity. Restraint will inevitably remain in many areas, though. No government can ever fulfil all demands of it, even a socialist one.

Yael Selfin, chief economist, KPMG

The chancellor will have limited resources to spend this year, even in the event of a smooth Brexit, if he wants to meet his fiscal target. They will not be sufficient to end austerity on most measures unless he opts to raise taxes.

Philip Shaw, chief economist, Investec

The health service was given a considerable boost in the Budget. However excluding the NHS, real current spending is projected to remain flat over the next few years. To win an election in 2022, the government probably feels that it has to relax the purse strings and politically expediency will probably drive it in that direction. The extent of any spending boost will be determined by the performance of the economy, which provides a clear (if indirect) political justification for ensuring that a Brexit deal is struck relatively quickly.

Andrew Simms, co-director, New Weather Institute

It is, perhaps, too obvious to say that how far the government will act in 2019 on its promise to end austerity depends, not only on whether the government is still in office to enact its promise, but on who will be leading it. However, on its own terms at least, its promise to end austerity while simultaneously “balancing the books”, is a bit like promising to bake someone a cake while telling the shopkeeper from whom you bought the ingredients that you’re returning them because you’re overextended.

That said, I believe that from the outset, austerity was an opportunistic and ideologically motivated strategy to pursue longer term political objectives, and not a practical or sensible economic plan. It is something which has had the effect of harming those who were least responsible for the events which led to the policy, while the most responsible have subsequently gamed the system to escape harm or responsibility. It is a simple fact that requires frequent repeating, public investment in services generates economic activity which results in revenues.

Intelligent public investment in future proofing the economy, for example in support for low carbon infrastructure and technology, helps build those sectors, crowd in wider investment, generate further employment and leave us all better off. The badly conducted experiment with quantitative easing (QE) did, nevertheless, prove the existence of the allegedly mythical “magic money tree”. The point is that if you do have the magic of public credit creation at your fingertips, you should do good with it, not, as was the case with QE, allow it to be frittered through the banks into the useless inflation of luxury assets.

Nina Skero, director and head of macroeconomics, CEBR

Government spending is rising quite sharply and this should take the edge off the virtually inevitable economic slowdown. Still, public sector spending is rather targeted and much of it focuses on the NHS. Hence, while austerity is coming to an end, not all areas of the economy will benefit equally. In the event of an especially stark downturn, Cebr believes the deficit should be allowed to increase with added spending on infrastructure and through allowing for the automatic fiscal stabilisers to come into operation.

Andrew Smithers, author

Some easing of constraints on expenditure are likely in health, police and perhaps education. Significant increases in taxes seem unlikely.

Gary Styles, director, GPS Economics

The government has the potential to smooth the way for an easier Brexit transition but I am not convinced this will be the most likely outcome. A weakened domestic economy and exchange rate may make it far more difficult for the government to actively ease fiscal policy in the short run. Focus is likely to return to the UK’s productivity woes and the growing issues of UK debt.

Phil Thornton, director, Clarity Economics

According to the Institute for Fiscal Studies, the chancellor would need to find £19bn from either extra taxes, more borrowing or higher than expected economic growth to fulfil his goals of ending austerity. They are the experts in this area. The government is unlikely to reverse its planned tax cuts and will not want to miss its budget targets. Growth is more likely to slow rather than accelerate. The most likely outcome is that the chancellor will, as he hinted in the Budget, use Brexit as the reason why the end to austerity will be delayed (again).

Samuel Tombs, chief UK economist, Pantheon Macroeconomics

The government is being guided by public opinion, which no longer supports austerity. Cyclically adjusted public borrowing at present is expected to equal 1.3 per cent of GDP in 2020/21, but the government likely will use all of the scope it has to borrow while still meeting its 2 per cent target. The government will be forced to concede that it is no longer on track for an overall budget surplus by the mid-2020s, but few will care in the short term. Going forwards, fiscal policy no longer will dampen GDP growth, but austerity will feel like it is continuing, because spending won’t keep up with demand for public services, which will rise rapidly as the population continues to age.

Kitty Ussher, economist and former Treasury minister

It depends how you define austerity. Since the stock of debt has risen throughout the “austerity” period and there have been no budget surpluses, it is hard to see what things will look like when it supposedly ends. If the end of austerity means the end of unpopular fiscal decisions, then it is quite possible the government will act because there is more room for manoeuvre as tax receipts are rising and the stock of debt peaks. In addition, with so much uncertainty and unease, and a small parliamentary majority, there will be little political appetite (or political capital) to fight on any other fronts.

John Van Reenen, professor, MIT economics department and Sloan management school

It has not and it will not. If there is a second referendum which is won by Remain, it will give a growth boost to the economy that may help lift us out of the quagmire. But more radical reforms are needed to boost long-term productivity growth.

Konstantinos Venetis, senior economist, TS Lombard

Austerity is coming to an end, but so are the positive fiscal surprises. As favourable domestic (job creation) and external (trade) macro conditions recede in 2019, the reality of deficient private demand will expose the chancellor’s fine balancing act between hitting fiscal targets, reducing debt and nurturing healthy economic growth. Fiscal policy is likely to remain broadly unchanged in the near term, but the difficult choices lie ahead. With monetary firepower virtually spent and the easy gains from sterling depreciation behind us, the direction of travel is towards a looser, pro-growth fiscal stance.

Daniel Vernazza, chief UK and senior global economist, UniCredit

Fiscal policy is likely to be eased in 2019 irrespective of Brexit, although the need for fiscal policy to do more to support the economy will be much greater if there is “no deal” with the EU.

Keith Wade, chief economist, Schroders

It is not clear what the promise means as the spending plans show an ongoing squeeze on underlying borrowing in 2019.

Martin Weale, professor, King’s College

Not very much. The new treatment of student loans shows the fiscal position to be worse than we had previously thought. With a high level of debt, fiscal space will arise only if productivity growth improves. But, even if that does happen, it will not appear in the OBR forecasts immediately.

Simon Wells, chief European economist, HSBC

The chancellor had a windfall in 2018 and he spent it on the NHS. So, in headline terms, per capita real-terms public spending is now projected to rise, not fall, over the coming years. In this sense, austerity has eased but with so much concentrated in health, it will continue in many other areas.

Peter Westaway, chief economist, Vanguard Asset Management

Austerity has two dimensions; in changes, it implies the shrinkage of the public sector deficit; in levels, it involves maintaining low levels of public service provision and public sector pay that followed from the deficit reduction. So even if plans are changed to stop the deficit shrinking, it is hard to see how meaningful improvements can be made to public services to reverse the earlier years of austerity. In the most likely scenario of Brexit occurring, the medium-term impact on the public finances is likely to be negative (notwithstanding the short-term boost to incomes this year as sentiment improves). Against a previous policy intention to continue with public spending restraint, it will take a truly monumental U-turn in policy for austerity to be ended.

If there is a change of government, something that could result from a Brexit-related fall in the government, a newly elected Labour government would very likely undertake a moderate-to-large fiscal expansion, mainly focused on increased public spending with offsetting increases in taxation mainly targeted on high earners. Even for a new Labour government, the legacy of years of austerity will not be easy to reverse quickly.

Matthew Whittaker, deputy director, Resolution Foundation

The chancellor delivered a significant easing of austerity at the Budget, reversing plans for further cuts in overall spending on day-to-day public services. But, with the NHS consuming almost all of the extra spending set out, austerity remains firmly in place for most parts of government. And any promise of an “end to austerity” must ring hollow among lower-income households for as long as the squeeze on social security remains in place. Delivering a true “end to austerity” in 2019, therefore, comes with a sizeable price tag. The chancellor has previously promised that he would look to utilise the £15bn headroom he has relative to his fiscal “mandate” once it became clear he no longer needed to keep anything back in reserve in case of a no-deal Brexit. Setting aside the possibility that no-deal may yet still arrive, his ability to follow through on that promise looks somewhat constrained. In part that is because he remains wedded to the hope of lowering the debt-to-GDP ratio, and in part it is because the ONS’s recent decision to bring student loans on to the borrowing books looks like almost entirely wiping out the chancellor’s headroom. He could sidestep this second barrier by changing either the approach to student finances or the details of his fiscal rules, but this is unlikely to be sufficient. The scale of the task involved in “ending austerity” means that he, or his successor, will inevitably need to explore options for raising taxes over the coming years, however politically difficult that might seem.

Mike Wickens, professor, University of York

Very unlikely, except as a compensation for any negative consequences from Brexit. It remains to be seen how the government will react to the effects on the fiscal deficit of the recent reclassification of student debt. As it is a purely accounting issue, it should have no effect, but these days one doubts the competence of the Treasury’s macroeconomists.

Trevor Williams, visiting professor, University of Derby

First, austerity will not end. Budget cuts are still built into the forward projections. However, a slowing economy, fewer net migrants and so weaker tax revenue growth, alongside contingency spending for Brexit will push the deficit above the target in the autumn Budget.

Alastair Winter, chief economist, Daniel Stewart & Company

There is very little scope for a major stimulus without resorting to major borrowing. Taxes, if anything, may have to rise if higher current expenditure is to be financed from current income. There is a backlog of claims for public sector wages and “underfunded” services. More talk than action in 2019 but that should change in the run-up to the next general election.

Garry Young, NIESR

It will be difficult for the government to go back on what it has already promised, but the extra public spending that is currently planned will not go very far. Overall spending is planned to remain at around its current fairly low level as a share of GDP and that probably cannot deliver the quality of public services that most people would like. The chancellor said that austerity is “coming to an end”, but it probably cannot begin to be ended entirely without tax rises. But after years of piecemeal tax measures, it is not clear which taxes ought to change in order to fund a more significant increase in public spending. That is why we at the institute have argued for a comprehensive tax review to improve the efficiency and fairness of the tax system. Such a review is desirable in its own right, but is especially needed in the light of demographic challenges that require extra public spending on health and social care that must ultimately be funded out of taxes.

Linda Yueh, adjunct professor of economics, London Business School

The government has already essentially pledged to spend the “windfall” on the NHS so it will need to find another £19bn in public spending to keep departmental spending unchanged by 2022-23 to stick to the pledge to end austerity. But as that is a few years out, the government will probably increase public spending in 2019 to address urgent issues such as the NHS and social care as well preparing for Brexit.

Azad Zangana, senior economist, Schroders

Based on the details of the last Budget, not at all. The structural deficit is still forecast to shrink, which is the definition of active fiscal tightening. This could change with work on the next spending review in 2019, but we do not expect a significant change in direction.

Name withheld

It is such a secondary issue right now that it will hardly be on the agenda. They will most likely end austerity.

How will monetary policy change in 2019? Do you think the Bank of England will get it right?

Howard Archer, chief economic adviser, EY ITEM Club

The Bank of England has come in for significant criticism in some quarters for not being aggressive enough in raising interest rates. However, we believe that the major uncertainties facing the UK economy have justified a cautious approach and we believe the BoE will continue to act judiciously.

On the assumption that the UK and the EU ultimately enact a Brexit transition arrangement in March 2019 and the UK economy holds up in the immediate aftermath of the exit from the EU, we believe the Bank of England could very well raise interest rates from 0.75 per cent to 1 per cent in May. However, it is entirely possible that the BoE could hold off hiking interest rates until August as the MPC may want to see sustained evidence that the economy is holding up in the aftermath of the UK leaving the EU.

We would not rule out two interest rate hikes in 2019 but we believe one is more likely as significant uncertainties persist — with lower inflation easing pressure for more aggressive BoE action.

Should there be a no-deal UK exit from the EU at the end of March, the growth and interest rate outlook will potentially be very different. The BoE indicates that interest rates could either go up or down should there be a no-deal UK exit from the EU, depending on the balance of how the UK’s supply capacity and demand side of the economy are perceived to be affected. Exchange-rate movements will also be a factor.

We strongly lean towards the view that interest rates would be far more likely to be cut than increased if there is a no-deal Brexit.

Nicholas Barr, professor of public economics, LSE

The Bank of England appears to be the last bastion of sanity, hence a good chance of getting it right.

Ray Barrell, professor, Brunel university

Monetary policy will probably involve higher interest rates in 2019. The BoE will not get it right (except by chance) but it can be expected to make the right decisions given the information to hand.

Marian Bell, Alpha Economics

Again, Brexit-related uncertainty means it is impossible to predict the path of monetary policy. It won’t be easy, given the uncertainty, but the likelihood is that the Bank of England will respond to developments by balancing demand with the potentially reduced supply potential of the economy, together with the implications of exchange rate movements, to keep inflation at a rate which is relatively low historically.

Neil Blake, global head of forecasting, CBRE

Caution sounds like the right approach. Beware of inflation expectations but be aware of weak economic growth.

Danny Blanchflower, professor, Dartmouth College

If there is a cliff-edge Brexit there is zero chance the MPC would rises rates to 5.5 per cent as GDP plummets and unemployment rises. So the bank rate will remain low and if there is a disastrous cliff-edge Brexit rates will go negative and QE will restart. I see no prospect of rates rising in 2019.

Nick Bosanquet, professor of health policy, Imperial College

The Bank of England is not reporting enough on markets which are most sensitive to monetary policy — for example, the housing market. Without the Help to Buy subsidy we would already be having a steep fall in house prices. The bank needs to watch for signs of a confidence collapse in markets such as housing and cars, which are most sensitive to Brexit loss of consumer confidence. In general, interest rates are more set by markets now than by the bank’s rate. The monetary committee deliberations are showing disconnect from real world risks. Monetary monitoring has to be much more market specific.

George Buckley, Nomura

Expect two hikes per year (May and Nov 2019). We have recently put back our forecast for the first hike from Feb to May thanks to Brexit uncertainty weakening the data in the run-up to the Feb meeting. However, we continue to expect two moves per year, the result of the fact that if the bank didn’t do anything on policy they would be missing the target on the upside by close to 0.4 per cent. Based on rules of thumb, that would require about 100bp of hikes over the coming two years to bring back to target. Thus our view of two 25bp hikes per year. No-deal would end up with the bank loosening policy which we think would be the right approach.

Jagjit Chadha, NIESR

If we end up leaving the EU in orderly manner with some form of deal that allows trade to continue mostly uninterrupted, I would expect some further, gradual removal of monetary accommodation. A more disorderly exit would pose more complications but to the extent that demand varies by more than supply in the first instance and that inflation expectations remain well anchored, the MPC has considerable flexibility to stabilise output in the short run and still hit its inflation mandate which it has done since establishment by lowering the expected path of the bank rate. It will perhaps be more interesting to observe, in the event of a disorderly exit from the EU, how the FPC will respond to the elevated risks the financial sector would be taking on by lending in that state of the world. The financial sector would be taking on the “socially” helpful task helping to stabilise output but at a cost of more risk. If the FPC is concerned only about financial risk, it ought to limit that activity but it probably would not.

David Cobham, professor, Heriot-Watt University

One has to feel more confidence in the bank than in the government, because the bank’s decision makers include some people who can and want to ask the awkward questions, and it doesn’t have to win an election.

However, it is not clear that the bank has faced up to all the questions concerning its pre-crisis behaviour, and there are still too many people (outside as well as inside) who view the current period as a deviation before a return to the old ways of doing things. And more importantly any reset of macroeconomic policy needs major changes to fiscal policy itself and its relation to monetary policy, and there is no sign of either.

Brian Coulton, chief economist, Fitch Ratings

If no-deal is avoided then we see one hike next year. It will be a big challenge for the BoE if we get no deal. The economy will weaken sharply but inflation will rise thanks to tariffs on UK-EU trade and the sterling sell-off that will probably accompany no-deal. We think on balance the BoE is more likely to follow the post-referendum playbook and ease policy rather than react to the breach of the inflation target. But they are keeping their options wide open. It would really depend on how sustained any sterling sell off proved to be.

Bronwyn Curtis, independent economist

Given what the Bank of England has implied in its recent comments, I would expect the MPC to raise rates by 25bp, probably in May. As we will get some clarity in Q1 on Brexit, that outcome will define what they do in 2019 rather than anything they have said recently.

The MPC’s natural tendency seems to be to do nothing, so if high levels of uncertainty over Brexit remain during Q1, then that is what they will do. I envisage them doing nothing for the whole year unless there is a sterling crisis, in which case they will hike rates to contain the inflationary outcome. I am not convinced that this would be the right response as we have seen periods in the past when a fall in sterling has not resulted in a surge in inflation in the domestic economy.

We will not know for quite a long time, well after 2019, whether the BoE have got it right or not as the lags are long and disentangling the combined effects of monetary and fiscal policy is difficult. I’m not yet convinced that they will get it right. They should have been tightening monetary policy in 2018. It was still at emergency loose levels even though the economy was growing. The distortions created by excessive borrowing at such low levels of interest rates now makes companies and households more sensitive to even small rate rises.

Howard Davies, chairman, RBS

Very little, I expect. The bank missed the chance to normalise policy further over the last couple of years. Now the economy will not be strong enough to wear significant interest rate rises.

Panicos Demetriades, professor of financial economics, University of Leicester

The Bank of England will have a tough job if Brexit materialises. In the case of a no-deal Brexit, it will face a poisoned chalice: rising inflation, a rapidly shrinking economy and additional uncertainty. I wouldn’t like to be in their shoes if that scenario materialises. If on the other hand, there is a people’s vote and Remain prevails, the job of the Bank of England will be much easier. Inflation will be subdued, although with a return to healthier growth and increased consumption and investment, there could be medium-term pressures on inflation and the bank may eventually need to raise rates.

Wouter den Haan, professor, LSE

Monetary policy will be easy relative to the other policy decisions that have to be made. UK monetary policy is in capable hands. Let’s be grateful for an independent Bank of England.

Swati Dhingra, LSE

Possibly more QE, especially if the economic slowdown happens quickly. The BoE also has to deal with new ringfencing laws so quite likely a period of experimentation and learning for monetary policy.

Peter Dixon, economist, Commerzbank

Most people agree that the BoE would have tightened more by now were it not for Brexit. The extent to which it will be able to act in 2019 thus depends on what happens here. I assume a business-as-usual, no hard Brexit outcome (either the Withdrawal Agreement is accepted or, more likely, the Article 50 period is extended) which gives the BoE scope to focus on the fundamentals. Clear evidence that wage growth has accelerated since mid-2018, appears to vindicate the BoE’s warning that the economy is operating with very little spare capacity and on the basis of my scenario, I would expect at least one — and maybe two — rate hikes in 2019. But risks are tilted to the downside since there are indications that the global economy is losing momentum which will have an adverse impact on the UK.

Noble Francis, economics director, Construction Products Association

Since the financial crisis, the bank has persistently been reactive rather than proactive. The Bank of England has effectively pencilled in a rate rise once the data show that UK economic growth has been sustained into the implementation period. This means after a deal is done with the EU that passes through the UK Parliament and then a lag for the macroeconomic data being published covering Q1 and early data for Q2 so, realistically, we are looking at the second half of 2019. If we end up with no deal then the bank has indicated that it would raise rates to counteract the impacts of sterling depreciations and import price rises but, realistically, if UK economic activity was negatively affected it is highly unlikely that the bank would raise rates and harm UK GDP further.

Charles Goodhart, professor emeritus, LSE

The Bank of England will be Brexit driven and outcome dependent. If we should have a Brexit no-deal, there is probably no such thing as a perfectly correct monetary policy. There will be a need to make the best of a bad deal.

Andy Goodwin, associate director, Oxford Economics

The MPC has a clear bias to normalise policy and its latest forecasts hint at a desire to hike twice in 2019, if Brexit is orderly. But inflation has consistently undershot the MPC’s forecasts over the past two years and we had expected that to be the case again, even before the recent collapse in the oil price — the forecasts are now almost certain to prove too high. We are also sceptical that wage growth will continue to accelerate. So even though the MPC appears keen to hike, we suspect that it will struggle to justify more than one hike in 2019 and it may be forced to keep Bank Rate at 0.75 per cent all year.

Mark Gregory, chief economist, EY

Monetary policy will be cautious until the way forward on Brexit is clearer. I think the Bank of England is too bullish on prospects for the economy and over-concerned about inflation and so I believe there is a good chance they will tighten too quickly.

Ruth Gregory, Capital Economics

If something close to Theresa May’s deal is ratified in Parliament, we expect the economy to grow more solidly than most forecasters anticipate next year. Meanwhile, the Monetary Policy Committee will be keen to limit the distortions associated with low interest rates and replenish ammunition with which to respond to future economic shocks. We anticipate three 25bp hikes in 2019 taking Bank Rate to 1.50 per cent by the end of that year. Admittedly, the decision to provide policy support in a disruptive no-deal Brexit would not be an open and shut case. But despite the Bank of England’s warnings that it is just as likely to raise as to cut interest rates, we still think that the MPC would loosen policy — perhaps from the current 0.75 per cent to 0.50 per cent or 0.25 per cent.

Rebecca Harding, chief executive, Coriolis Technologies

Monetary policy will be driven in 2019 by Brexit and its aftermath and will be underpinned by tighter macro-prudential rules in the likely event of interest rates remaining as they are. The MPC itself appeared unwilling to give any form of forward guidance in its December meeting but simply pointed to the uncertainties that surround the UK economy at present. Growth is likely to be sluggish, because of Brexit and because of wider global geopolitical and geoeconomics risks, notably the threat of a broader trade war between China and the US and slowing growth in Asia. The Bank of England will be watching for any signs of capital outflow and will use macro-prudential policy, particularly counter-cyclical capital buffers, to maintain the stability of the UK financial system. Its approach is likely to be similar to that after the referendum in 2016 when interest rates fell and capital buffers were used alongside measures to ensure that interest rate cuts were passed on to borrowers. Arguably the Bank of England got macro prudential policy right at that point, although the interest rate cut was, perhaps, unnecessary. Rates are still historically low, and the MPC will not be looking to cut further and it is unlikely that they will rise during 2019 if uncertainty persists.

John Hawksworth, chief economist, PwC

If there is a reasonably smooth Brexit, we would expect the Bank of England to continue with gradual rises in interest rates, starting with a 25 basis-point rise some time in mid-2019. If there is a disorderly Brexit, then we would expect the bank to seek to mitigate the pain through the same kind of relaxation of monetary policy as we saw in August 2016. But there are limits to how much effect this would have given that rates are starting from a low level, so much of the burden of responding to such a shock would need to fall on fiscal policy.

Brian Hilliard, chief UK economist, Société Générale

Bank rate will be increased to 1 per cent in May but there is a risk of later. A central bank never gets it right because they don’t have perfect foresight!

Paul Hollingsworth, UK economist, BNP Paribas

I don’t envy the Monetary Policy Committee at present. They face an extremely uncertain outlook, and a backdrop of increased calls to provide more concrete guidance over the likely path for interest rates. We think that the Bank of England is essentially waiting for the green light from Brexit before hiking interest rates. Assuming there is an orderly Brexit outcome, we would expect two hikes in 2019, although not until May at the earliest for the next one. If there is a disorderly Brexit, we don’t think the MPC will be in a rush to hike interest rates, even if there is a currency-driven rise in inflation. If anything, our bias is towards policy support, rather than tightening.

Ethan Ilzetzki, lecturer, LSE

With wage pressures increasing and US interest rates rising, I expect the bank will be forced to raise interest rates up to twice this year. Last year I overestimated the degree of tightening in 2018. The bank’s (legitimate) concerns about Brexit uncertainty have led to a “wait and see” approach, despite some signs of inflationary pressure. It is therefore likely that the bank will backload rate increases and do so only when inflation is manifestly over its target.

Dhaval Joshi, chief European strategist, BCA Research

As in the evolution of most things in the UK in 2019, monetary policy will hinge on whether the UK avoids a no-deal Brexit or not. In any case, the recent collapse in the crude oil price will pull down inflation in early 2019, removing the need for an imminent hike to interest rates. But later in the year, the BoE is likely to tighten policy conditional on the UK avoiding a no-deal Brexit.

Stephen King, HSBC

Very little change but, again, it’s all contingent on Brexit. “Getting it right” in a world of massive uncertainty is a big ask, particularly when the yardsticks of success are so tricky. We know by now that achieving price stability alone is not a sign of lasting economic success: if it had been, there would have been no global financial crisis.

Ashwin Kumar, chief economist, Joseph Rowntree Foundation

If the growth in average real wages continues, other things being equal, we would see gradual increases in interest rates. However, a hard Brexit bring two threats: reduced growth, and higher inflation, and the bank will be torn between lower rates to avoid intensifying the downturn, and higher rates to bring inflation under control. In the last recession and slow recovery, the first objective dominated, and higher inflation was tolerated on the basis that its causes were short-term. I’d expect the same reaction to Brexit-related risks so the bank will probably delay increasing interest rates if they perceive the risks of Brexit-related economic contraction have increased.

Ruth Lea, economic adviser, Arbuthnot Banking Group

Monetary policy will probably change little in 2019, whatever the Brexit scenario.

As said, above, in a no-deal situation, the economy may weaken modestly (and the pound would probably wobble) and the bank, under these circumstances, may hold off tightening policy. (I do not believe the bank would dramatically raise rates if no deal, whatever the economic consequences.) Indeed the bank may even relax policy by either cutting interest rates and/or more QE — but I do not regard this as likely.

In a deal scenario, the bank may feel the need to raise rates by, say, 0.25bp during 2019. Unemployment is now very low, the economy is now pretty much at full capacity, and the bank may feel the need to head off the potential build-up of internally generated inflationary pressures.

John Llewellyn, Llewellyn Consulting

Sterling’s performance will have a huge influence. A collapse in the pound due to a hard Brexit would raise the Argentine conundrum: raise rates to support the currency and damp domestic demand; or curb rates to support activity and head off social pressures. There never is an acceptable answer.

Gerard Lyons, chief economic strategist, Netwealth

I expect monetary policy to be on hold in the early months of the year. There has already been significant monetary policy tightening over the past year. The combination of a small tweak in rates, ending of lending schemes, hike in counter-cyclical capital buffers, plus, perhaps, more general tightening of lending as a result of micro-prudential measures, has led to sluggish lending and monetary growth. While rates are low and sterling is competitive, financial conditions are far from loose.

Will the Bank of England get it right? Naturally, I hope so. While there is some excellent analysis that comes out of the BoE, their forward guidance on the economy has left much to be desired. My view is that there should be a bias towards easing early in the year, aimed at stimulating lending and monetary growth, but as the year progresses there may be scope to change the bias towards tightening. To get it right, the BoE needs to be gradual and predictable in its actions.

Stephen Machin, professor, LSE

Whilst real wage growth stays weak, it would not seem sensible to raise interest rates. Will the Bank of England get it right, they don’t seem to have done so well so far, but more QE would seem to be on the cards.

Chris Martin, professor of economics, Bath university

With an EU transition, I expect the policy rate to be no more than 50 points higher by year-end. Without a transition, I expect the policy rate to fall as low as it can.

Costas Milas, professor of finance, University of Liverpool

This depends on Brexit-related events. To the extent that we avoid a no-deal Brexit, it is more likely than not that we will see at least one interest rate hike. If, on the other hand, a no-deal Brexit occurs, it is more likely than not that Mark Carney and his MPC colleagues will intervene by cutting the policy rate and/or authorising additional quantitative easing. Either way, I trust that BoE officials will get it right.

Andrew Mountford, professor, Royal Holloway

Again this is too big a topic to address in a few sentences. Ensuring financial stability in a global market, with political players, tax shifting and regulatory arbitrage is not a straightforward task (although I’d have thought reducing the dominance of UK housing on UK banks’ balance sheets would play a part).

David Miles, professor, Imperial College

Interest rates seem unlikely to change much at all. If there is a sharp shock around Brexit the scope to cut rates is limited as would be the willingness to raise rates.

Allan Monks, UK economist, JPMorgan

While many have focused on the weakness in demand growth, a point often missed is the even weaker supply backdrop. Work-related net immigration from the EU has slowed sharply, while the sustained weakness in business investment is likely to be restraining already weak productivity growth. We estimate these developments, which have resulted from the Brexit vote, have lowered the UK’s effective potential GDP growth rate by 0.6 percentage points to 1.0-1.5 per cent.

Jacob Nell, chief UK economist, Morgan Stanley

We expect Brexit uncertainty and weaker growth will keep the MPC on hold at the start of the year but we see the MPC tightening — likely with 2 hikes and an early start to QE unwind — once a hard Brexit has been ruled out and growth has started to recover. We think the MPC have a hawkish bias given an economy running at capacity, inflationary pressure from looser fiscal policy and a tight labour market, and rates still well below neutral. Given our view that the economy is currently running at capacity and that growth in a soft Brexit will run significantly above the economy’s reduced potential, we forecast a widening positive output gap and rising inflationary pressure. In this context, we think that the risk is that the MPC are slow to pick up the pace of tightening, and inflation holds above target for a sustained period. However, since the MPC is alert to these risks, we expect them to deliver an appropriate policy response.

Rain Newton-Smith, chief economist, CBI

Assuming a smooth transition, I expect interest rates to end the year at 1.25 per cent. Despite inflation falling back, the MPC have a clear eye on domestic cost pressures building. Labour market indicators are tight and skill shortages are biting. Wage growth is showing more signs of life recently, and with weak productivity growth, this is pushing unit labour costs higher. So we will see limited and gradual rate rises, around two next year bringing rates to 1.25 per cent — with low interest rates still supporting growth. But if we have a no-deal Brexit or continued uncertainty slows growth further, then those interest rate rises will fade further into the future.

Andrew Oswald, professor of economics and behavioural science, Warwick university

Very difficult to say because we do not yet know how hard our Brexit will be. If there were a collapse of confidence in the summer of 2019, it is likely that it would encourage comparative dove-ishness from the bank. Probably, yes, the bank will.

David Owen, managing director and chief European economist, Jefferies

With wages accelerating, the bar for raising rates is very low. This is a common theme in many countries, with more focus on financial imbalances and financial stability that have developed since the financial crisis. One can certainly envisage a scenario when the BoE raises rates twice in 2019 and in a no-deal scenario we can certainty buy the view that they are raising rates if supply falls a lot faster than demand, and sterling weakens.

If in a no-deal scenario this is combined with maximum political uncertainty then sterling could be marked down quickly. The UK current account deficit widened out again to almost 5 per cent of GDP in the third quarter of 2018, increasing such risks. Since the 2016 referendum it has been largely financed by net foreign buying of UK Gilts, in large part courtesy of the ECB and QE. But this has now come to an end.

As far as the BoE is concerned the situation is different to 2016 when there was still an output gap and wages hadn’t accelerated. If the BoE does raise rates twice in 2019 in a managed Brexit scenario, focus will start to switch more to the BoE’s balance sheet and how best to shrink it. On balance, we expect the BoE to get the big decisions broadly right.

Tej Parikh, senior economist, Institute of Directors

A deal should give the BoE the scope to make a few rate hikes next year. But the MPC will need to be careful not to overestimate the impact of a tight labour market on the potential for wage inflation. They should keep in mind that elevated business costs and productivity challenges are likely to restrain significant salary rises, particularly in SMEs. On the other hand, a no-deal [Brexit] might push the MPC into expanding QE or other extraordinary liquidity injection measures.

Ann Pettifor, director, Policy Research in Macroeconomics

After hinting that rates would rise, the Bank of England hesitated in 2018. This suggests that the MPC has understood the scale of the UK’s economic weakness, and is therefore likely to get it right in 2019. In the event of a chaotic Brexit the BoE will lower rates. However the impact will be limited, if a cut in rates is not accompanied by expansionary fiscal policy.

John Philpott, The Jobs Economist

Brexit dependent again. I’m sure the bank will endeavour to do its best.

Kallum Pickering, senior economist, Berenberg

Yes, the BoE will get it right. With economic growth likely to run slightly above trend and clear signs of tightness in the labour market, there is a strong case for the BoE to continue to gradually normalise monetary policy in 2019. It is highly unlikely that the BoE would hike rates again before the Brexit question is settled. May is therefore the most likely date for the next hike. As long as the UK avoids a no-deal hard Brexit, expect the BoE to pick up the pace of rate hikes to two per year in 2019 and 2020 as wage growth edges further above 3 per cent year on year. This would take the Bank Rate to 1.75 per cent by the end of 2020.

Christopher Pissarides, professor, LSE

I expect a very moderate rise in interest rates. From today’s perspective they will get it right but given the large uncertainties (and not only Brexit, there is also Trump and Xi to consider) by 2020 it might turn out to have been wrong. In view of these uncertainties more caution is probably the right attitude.

Jonathan Portes, professor of economics and public policy, King’s College, London

Obviously, this too depends on Brexit, but I think that as the economy weakens the bank will (rightly) be reluctant to raise rates quickly. If there is a short-term fix other than no deal, rates might rise by 0.25bp or 0.5bp, but still remain at historically very low levels. In a chaotic no-deal scenario, I think it’s highly implausible that the bank would raise rates.

Vicky Pryce, chief economic adviser, Centre for Economics and Business Research

I would be very surprised if in the period of uncertainty ahead monetary policy was tightened to any significant extent. Indeed, should there be a no deal or a Brexit outcome, however interim, that would be seen as possibly destabilising for the markets the BoE would, if necessary, reduce interest rates again and inject even more liquidity into the markets just as it did after the referendum vote in mid-2016.

Sonali Punhani, UK economist, Credit Suisse

The Bank of England delivered its expected rate hike in August. Going forward, the range of potential outcomes is wide and Brexit is the biggest risk to the economy. If a smooth Brexit path eventually becomes clear (which is the BoE’s assumption), rates are likely to rise quicker than markets expect and the BoE is likely to turn hawkish on the back of building wage pressures, fiscal stimulus announced in the Autumn Budget as well as a likely rebound in growth.

Ricardo Reis, LSE

It all depends on Brexit. Any responsible forecast has to be conditional on what the final outcome is. Different outcomes require very different policies. Any unconditional forecast, as asked in this question, is ultimately very far from what happens.

Philip Rush, founder and chief economist, Heteronomics

I continue to expect two rate hikes from the BoE during 2019 (May and Nov). As ever, the optimal response will be state-dependent. Clarity about the Brexit process smoothly transitioning is needed before the MPC can confidently remove some more monetary stimulus. The delay in the interim means it may appear to have waited too long with the benefit of hindsight. However, given the current information set, it is appropriate to wait a little longer than it might otherwise have done, in my view.

Yael Selfin, chief economist, KPMG

The Bank of England is concerned about rising inflationary pressures and is likely to raise rates at least once more in 2019 if a Brexit transition deal is agreed. However, in the event of a disorderly Brexit, it is likely to step in and support lending markets and the economy more broadly so that businesses can step up investment to recover productive capacity.

Philip Shaw, chief economist, Investec

On a speedily agreed deal, the economy gathers a modest degree of steam and the BoE goes back to focusing on the labour market and the possible impact of expansionary fiscal policy. Of course, things would get much more complex on a no-deal out-turn. The MPC has insisted that it could raise rates on a disorderly Brexit, given a negative impact on supply in the economy, a likely fall in the exchange rate and the imposition of tariffs. The point of comparison is of course the post-referendum period in 2016, when the committee eased policy. Admittedly, the two situations are not exactly the same. For example, as the BoE points out, the starting point of inflation is materially higher now than it was then. But the argument that there is currently next to zero economic slack is a curious one, given that the fall in GDP would almost certainly result in greater capacity (ie unemployment is likely to rise). We consider it difficult to envisage the MPC tightening policy in these circumstances. It is more likely that the committee would cut rates again, albeit perhaps not immediately. We hope that the MPC is not put to the test.

Andrew Simms, co-director, New Weather Institute

With so much uncertainty elsewhere, it is extremely unlikely, barring the need for urgent action in the light any sudden Brexit shocks, that the Bank of England will dramatically change course. Their cautious watch and holding of interest rate rises in the face of a tentative UK economy will probably continue.

But it is important to remember that a wider range of factors than the bank’s interest-rate setting influence the cost of capital to key sectors. For sectors which are supposedly key to the government’s industrial strategy, and include building “a low carbon, more resource-efficient economy”, policy certainty, regulation and resulting perceptions of risk are key. The government is promising that the UK will grow whole new industries and transform existing ones. Yet solar power has been shut out from the energy sector’s Contracts for Difference for years and onshore wind been starved of even the slightest breeze of official support. Meanwhile, the government is ending the export tariff which allows small, often household solar generators to get a fair price for the surplus electricity they export to the grid. All these risks and uncertainties raise the cost of capital to the sector showing the need for much greater joined-up policymaking.

Nina Skero, director and head of macroeconomics, CEBR

The Bank of England is keen to normalise monetary policy and would be willing to look through some signs of continued economic weakness in order to achieve this. CEBR expects Base Rate to remain unchanged until Q3 2019 at which point we believe the Monetary Policy Committee will return to a path of monetary policy normalisation by gradually starting to increase rates.

Andrew Smithers, author

Growth seems currently in line with its potential circa 1 per cent per annum. Monetary policy will need to change if it speeds up. If it slows then fiscal policy will probably ease. The most likely outcome is that monetary policy will be unchanged.

Gary Styles, director, GPS Economics

I expect inflation to surprise on the upside and as a result the bank will be under increasing pressure to tighten policy. A weak exchange rate and higher inflation may not be sufficient to get the bank to tighten policy quickly but the pressure will grow over 2019 and 2020. A slow response from the bank may lead to significantly higher interest rates in the medium term.

Suren Thiru, head of economics and business finance, British Chambers of Commerce

The Monetary Policy Committee is likely to increase interest rates once in 2019 to 1 per cent, with the next rate rise likely in the final quarter of the year. However, the Bank of England’s current approach to monetary policy is a concern as it appears to be overly focused on reinforcing a pre-determined path for rates, rather than on economic conditions — a course of action that could further undermine business and consumer confidence.

Phil Thornton, director, Clarity Economics

Oh dear — we are back to Brexit. The more an outcome and the less likely that growth will slow and the more likely that the MPC will want to focus on the increasingly tight labour market and rising wages. But this may all be overshadowed by the extent to which the world economy continues on a path of a synchronised slowdown and the impact from any worsening in trade relations between the United States and China. If the Bank of England gets it wrong, they are unlikely to be on their own.

Samuel Tombs, chief UK economist, Pantheon Macroeconomics

The MPC will have to respond quickly to any pick-up in GDP growth following a Brexit deal being signed off, given its views that the economy already is heading for a period of excess demand and that Bank Rate still is well below its equilibrium level. The effective interest rate on the outstanding stock of mortgages also will continue to decline, as households refinance old loans at cheaper rates, unless the MPC hikes interest rates this year. Accordingly, we expect the MPC to raise Bank Rate to 1.00 per cent in May and then to 1.25 per cent in November. This will catch markets by surprise, which currently are pricing-in only a 60 per cent chance of one increase in Bank Rate by the end of 2019.

Kitty Ussher, economist and former Treasury minister

It has shown an ability to be responsive to changes in the economic mood; I would expect it to be a stabilising influence.

John Van Reenen, professor, MIT economics department and Sloan management school

This all depends on Brexit. A no-deal will mean huge turmoil and attempted monetary easing, but since the long-term Brexit damage is structural, not temporary/cyclical, there is little that monetary or fiscal policy can do to staunch the flow of economic blood loss.

Konstantinos Venetis, senior economist, TS Lombard

Depressed consumer confidence means that, contrary to the MPC’s central projection, there is a good chance that households will not boost spending in line with real earnings. In such a scenario, domestically generated inflation would most likely undershoot expectations, complicating the bank’s envisaged “gradual and limited” rate hike path. There are also reasons to think that the response of wages to changes in unemployment is smaller than in the past, consistent with a flatter Philips curve that has shifted lower. As real incomes gradually improve and the attractiveness of hiring additional labour relative to capital investment reaches its limits, we may be entering the early stages of a turnround in productivity. So labour market slack may be somewhat less limited than the bank is pencilling in. The MPC says the appropriate policy response to Brexit “will not be automatic and could be in either direction”. Yet it is hard to see how the committee could avoid a rate cut in response to the economic and financial market turbulence that would result from a crash-out Brexit. With an orderly Brexit, the bar for a policy reversal is high, however. This is both from a fundamental and a risk-management standpoint, not least with a view to safeguarding exchange rate stability. After all, the MPC thinks the equilibrium real interest rate (‘R-star’) is likely to rise further towards trend as uncertainty dissipates and fiscal austerity is gradually scaled back.

Daniel Vernazza, chief UK and senior global economist, UniCredit

If, as I expect, there is an orderly exit from the EU, then the Bank of England will likely hike the bank rate by 25bp in May next year; that is, after a couple of months have passed post-March 2019 to confirm their expectations of a recovery in business activity. After that, the bank is likely to pause for the rest of the year amid a slowdown in the global economy. With hindsight, it will probably prove to be a mistake by the bank to continue its tightening cycle into 2019.

In the event of a disorderly exit, the bank has been at pains to say that monetary policy could move in either direction depending on the exchange rate and the balance of demand and supply, although in reality it would very likely cut rates — at least initially — to support demand.

Keith Wade, chief economist, Schroders

The real challenge for the Bank of England would be in the event of a hard Brexit where the pound drops significantly. Higher inflation would have to be balanced against weaker activity in setting monetary policy. Similar to 2016, but the economy is more advanced in its cycle with greater risk of a sustained rise in inflation.

Martin Weale, professor, King’s College

Monetary policy will need to strike a balance between the tight state of the labour market at present and the effects of possible very weak growth or contraction arising from Brexit. But, since I do not know how Brexit will be resolved it is not possible to guess where that balance may be. It is not very helpful to describe the decisions of the Monetary Policy Committee (it is not the bank which decides on monetary policy) as either right or wrong. Each member makes their own decision based on their interpretation of the evidence. Even if hindsight suggests some other decision might have been more appropriate that does not mean that the decisions are wrong. The range of opinions offered by commentators means that there are always some who with hindsight made “better” judgments than the members of the MPC but that does not mean that members of the committee were wrong.

Simon Wells, chief European economist, HSBC

So much depends on Brexit. The MPC seems minded to tighten policy further due to the tight labour market. However, the low oil price, tighter global financial conditions and a slowing world economy means things could have changed by the time more clarity emerges.

Peter Westaway, chief economist, Vanguard Asset Management

Under the most likely scenario of a Brexit deal (either compromise May or Norway soft), the MPC will begin a pre-emptive tightening of policy during 2019, with at least 2 rate hikes as activity picks up in an environment of increased optimism about the UK economy. If Brexit were to be stopped, the MPC may need to act even more decisively and raise rates even more aggressively, although headline inflation would be held back by the surge in sterling. In these upbeat scenarios, the MPC would likely judge the tightening appropriately although calibrating it correctly in the no-Brexit case may be a challenge.

Most interesting is the tail-risk possibility of a no-deal Brexit where a probable collapse in activity would pose a considerable dilemma for the MPC. Would the demand shock of a collapse in confidence require a cut in rates, or the supply shock of failing supply lines and impeded labour supply require an increase in rates? It is unlikely that the MPC will have the required luck and judgment to gauge the policy response appropriately in this scenario.

Matthew Whittaker, deputy director, Resolution Foundation

In the event of a no-deal Brexit, monetary policy is likely to change very rapidly and with as much gusto as the MPC can achieve. It will be hard to calibrate just how much action will be needed, but the bank is likely to want to act first and ask questions later. Under a more orderly transition, there’s every chance the bank chooses to bide its time. Inflation is almost at target and there are enough factors pulling in different directions (wage pressure is building, but house-price growth is slowing) to warrant plotting a steady-as-she-goes course while Brexit starts to play out. My guess would be that rates move by no more than 25bp over the course of 2019.

Mike Wickens, professor, University of York

The bank has not got it right for several years and I am not expecting any change soon. As it is unlikely to respond to the UK’s needs, the interesting question is how it responds to the recent tightening of US monetary policy. The right policy is to respond to higher UK inflation and to maintaining the real exchange rate following US interest rate hikes, but it might just continue its highly political stance by allowing the real exchange rate to drift downwards to offset Brexit.

Trevor Williams, visiting professor, University of Derby

I think the bank will either hold rates or cut them. The December MPC minutes explicitly stated that it stands ready to act in “either direction”. Any form of Brexit is damaging relative to the status quo, in my view, so they are more likely to cut rates, and expand QE even as the authorities ease fiscal policy than to raise them.

Alastair Winter, chief economist, Daniel Stewart & Company

It does not seem to matter much any more what the BoE does. One or two 0.25 per cent hikes are likely before year end but base rates at 2 per cent or more still seem years away. The government will need the BoE to keep renewing its gilt holding indefinitely.

Garry Young, NIESR

The Monetary Policy Committee has a clear mandate and operating framework that together are more important than individual changes in interest rates. So long as the MPC is flexible in the way it pursues the inflation target and explains its policy actions clearly then it won’t go far wrong.

Linda Yueh, adjunct professor of economics, London Business School

Monetary policy in 2019 will hinge on how Brexit plays out. The Bank of England has warned that disorderly Brexit will be a “supply” shock which implies that interest rates would have to rise in order to counteract higher inflation even if output is also negatively affected. This is due to their inflation mandate but also because of the nature of supply-side shocks. But, this looks counterintuitive and will put pressure on the bank since the expectation is that the BoE would cut rates just like they did after the EU referendum result.

Azad Zangana, senior economist, Schroders

We expect the bank to raise the main policy interest rate by 0.25 per cent in May, and then again in November, ending the year at 1.25 per cent. There may also be some discussion of ending the reinvestment of maturing bonds under the bank’s quantitative easing programme, but we doubt this will start in 2019.

Name withheld

I do not anticipate a big change, except when there is a hard Brexit with logistics disasters.

Would you like to tell us anything else?

Ray Barrell, professor, Brunel university

Who knows what will happen in 2019 (or 2020). The prospects for the UK look much more uncertain than in late 2008. At least there are some outcomes that could be positive, or not too bad, including accepting the deal on offer.

Neil Blake, global head of forecasting, CBRE

A binary outlook. All depends on Brexit. World economic conditions are likely to be challenging in H1.

Danny Blanchflower, professor Dartmouth College

The world economy is slowing again. Brexit looks like a major downside risk. So the balance of risks are strongly to the downside. I can see no upside in 2019.

Nick Bosanquet, professor of health policy, Imperial College

Even without Brexit there would be strains from change in markets — decline of diesel cars, high street retailing and branch banking etc. There would be employment declines in these areas in any case. The most important Brexit effect is to deter investment in next generation markets — for electric cars, digital economy etc. Brexit will push towards defensive decisions and make it more difficult for companies to take risks. A defensive economy with reduced competitive pressure from EU companies will lead to longer term stagnation at around 1 per cent growth. From 1992 to 2008 economic growth at 3 per cent a year was the highest for 300 years as a result of greater competition and single market. Withdrawal will reverse many of these positive effects.

David Cobham, professor, Heriot-Watt University

I think the extent to which the UK’s public services and UK society have been degraded (for no good reason and with no good purpose) since 2010 is genuinely shocking, and I believe more economists in higher education and in the media should speak out about this more strongly.

Bronwyn Curtis, independent economist

It is time that the UK lost its swagger. It has been losing influence in the world and it is time for a reality check. The UK already has the EU offside and the Commonwealth and/or the US or other countries in Asia are not going to do anything special for the UK. In fact, it is probably just the opposite. They will be happy to take what they can from the UK, but give little in return.

The UK needs to focus on retaining its skilled people and on generating domestic growth rather than have politicians fighting over a shrinking pie.

Paul De Grauwe, professor, LSE

I did not dare to make predictions. Due to the uncertainties surrounding Brexit, “radical uncertainty” is now so high that any forecast I make today will make me look like a fool in six months time.

Panicos Demetriades, professor of financial economics, University of Leicester

2019 promises to be the most interesting ever year. We could see a reversal of Brexit. Equally likely, perhaps, we could also witness the UK crashing out of the EU as a result of the toxic politics of the two-party system. Happy New Year, whatever happens!

Wouter den Haan, LSE

There was a time that I could imagine some scenarios under which Brexit would be overall beneficial for the UK. That is becoming more difficult. I am also very worried that the inability of our governing bodies to act responsibly and reach a consensus is not just specific to Brexit and may hinder progress in the UK for years to come.

Swati Dhingra, LSE

A disorderly Brexit will likely have worse impacts on young people who are already feeling the pinch of the post-crisis era.

Peter Dixon, Commerzbank

This will clearly be another year dominated by Brexit as the political noise continues to drown out the economics. But we have now wasted the better part of three years on a project that has absorbed a disproportionate amount of policy resources and we are still not coming up with the right answers on a range of policy questions from migration to the funding of prisons to ensuring that the social safety net remains in place. I suspect we will be having the same debates in a year’s time, but the longer we postpone questions of public service provision, the more difficult they will be to fix.

Noble Francis, economics director, Construction Products Association

A few other points spring to mind in various areas that may or may not be of interest/use: 1) In spite of growth in real wages and retail sales, we are expecting the first quarter of 2019 to be very difficult for some traditional high street retailers, as the first quarter of 2018 was. It would not be a surprise to see a few high street names go into administration. 2) In terms of stockpiling, where the focus has been on dealing with “no deal”. Many manufacturers have been stockpiling already but it is not always possible due to a lack of production capacity, a lack of storage space and the rising cost of warehousing space, some materials and products have a limited shelf life and for some products there is an unwillingness to stockpile products that may be needed for later that could be sold globally now.

Charles Goodhart, professor emeritus, LSE

The traditional political set-up in the UK with fairly monolithic parties, Conservative and Labour, is under even greater strain than the economy. Can the current political structure stand the strain? What will politics look like by December 2019? Will the young want to emigrate?

Mark Gregory, chief economist, EY

While it is impossible not to be worried about short-term prospects, the real story is what is happening to long-term prospects. The current political and economic uncertainty in the UK and the declining social climate are causing foreign businesses and investors to downgrade their plans for the UK. The base case assumption is clunkier customs, poorer market access and lower migration. The response will be to direct activity and capital to the EU over time, downgrading the UK to a sales and distribution centre.

Ruth Gregory, Capital Economics

If Theresa May can get her deal through parliament (we’d put the chances at around 30 per cent), sterling could soar to $1.45. Of course, a “no deal” scenario presents a key downside risk to sterling. If there were some advanced planning, with agreements reached between the UK and EU to keep things flowing, we suspect that the exchange rate would fall to $1.20, roughly where it got to after the Brexit vote. And if the UK crashed out of the EU, we would expect the rate to drop to something like $1.12. But we now think that the chances of a “no deal” Brexit are only about 20 per cent. By contrast, we put the chances of Article 50 being revoked before, or extended beyond, March 29 at 50 per cent, and think it could be positive for sterling. Admittedly, there would be little upside for the currency if uncertainty dragged on, and there might be some downside if there were a snap general election won by Labour, given its anti-business policies. But sterling would probably get a lift from any signs of a softer Brexit and/or a second referendum. Overall, we think that there is more upside, than downside, risk for sterling when we weigh up the potential outcomes that could result from the chaos surrounding the UK’s scheduled departure from the EU.

John Hawksworth, PwC

The UK focus is understandably on Brexit at present, but we should not ignore the downside risks facing the global economy, particularly if we look ahead to 2020-21. The possibility of a hard landing in the US and/or China is a potential concern looking 2-3 years ahead, although we don’t expect more than a gradual slowdown in these economies in 2019.

Ashwin Kumar, chief economist, Joseph Rowntree Foundation

In the longer term, every Brexit scenario is likely to increase inflation. If benefits and tax credits are not increased in line with this higher inflation, we will see higher rates of poverty. There will be a temptation for government to respond to Brexit-related fiscal pressures with further reductions in the real level of in and out-of-work benefits. If this happens, it will be those on the lowest incomes to do worst out of our new relationship with the EU.

John Llewellyn, Llewellyn Consulting

The answers to these questions are highly dependent on the Brexit outcome — which at the time of asking is anyone’s guess.

Gerard Lyons, chief economic strategist, Netwealth

Despite near-term political uncertainty, I remain positive that Brexit will bring longer-term benefits to the economy. To make a success of Brexit the UK needs to get three areas right: our future relationship with the EU; positioning ourselves globally; and our domestic economic and financial agenda. There would be a major constraint on future economic success if our relationship with the EU places constraints upon our global ambitions or our domestic policy, where we need to address the imbalances in the economy and boost investment and infrastructure spending, encourage innovation and have the right policy incentives in place.

David Miles, professor, Imperial College

Paul Krugman seemed to me right when he said that assessments of the medium and longer-term impact of Brexit on the UK that rested on supposed links between trade arrangements and productivity were not based on anything reliable. It is hard to take seriously a forecast that says one version of Brexit knocks (say) 4 per cent off GDP in the long run while a different version knocks (say) 5 per cent off GDP when we don’t understand much about why UK productivity is close to 20 per cent below the trend it seemed to be following up to the financial crisis.

Andrew Mountford, professor, Royal Holloway

The key issue, which is much analysed in academia, is how nation states can react to the presence of increasingly powerful multinational corporations who are finding ever more ways of avoiding paying taxes on their profits (including influencing the political process). Research suggests that the lost tax revenue is very significant. Without sufficient tax revenues, states will not be able to ensure markets function efficiently (enforcing fair competition, contracts, property rights, regulating monopoly power, investing in public goods such as education, transport infrastructure etc). Thus efficiency and productivity growth will fall. A poorly functioning state is also less able to collect tax revenue and so there is a danger of a self reinforcing process of decline. It must therefore make sense for nation states to co-operate and co-ordinate with each other and agree common rules for taxing and regulating powerful global companies including global banks. The EU’s record on tackling large firms and tax avoidance (diesel scandal, banking crises, climate change, tax havens and tax avoidance) is weak but no weaker than the UK’s. Brexit is clearly moving 180 degrees in the wrong direction.

Jacob Nell, chief UK economist, Morgan Stanley

Pessimistic on potential. We expect reduced EU labour migration to reduce labour force growth, and lower potential growth to 1.3 per cent even after allowing for some recovery in investment and productivity. This more pessimistic estimate — below the 1.5 per cent estimates made by the OBR and BoE — underpins our hawkish view on inflation and rates.

Charles Nolan, Glasgow university

The world economy is providing some notable headwinds, not least political risks to the international trading system. That also exacerbates further the downside risks associated with the UK withdrawal from the EU.

Andrew Oswald, professor of economics and behavioural science, Warwick university

An outside possibility is that there will be some attempt to block Brexit — and that will engender civil disobedience, violence, and looting. Those who say it could not happen in Britain need to remember the remarkable events of August 2011. Social media now make it easier than ever for 10,000 dangerous and disaffected people to congregate on a dark evening. Policing in a democracy is not set up to deal with that kind of phenomenon. I hope never to see such a thing in my nation. Any such trouble would be bad for economic confidence, among other grave problems that might result.

David Owen, managing director and chief European economist, Jefferies

Brexit is the Great Disruptor and, over time, can be expected to lead to a significant change in the economic geography of the EU. Almost whatever happens, events since June 2016 will have caused companies to question their supply chains and to perhaps look beyond the EU for markets and suppliers. For many Brexit will have been a reason to fundamentally question their business model. The harder the Brexit, the more likely this happens, but even the softest Brexit will involve change. Advisory, M&A and financing will follow, along with capital flows.

Ann Pettifor, director, Policy Research in Macroeconomics

Brexit will happen (assuming it does) within the context of a slowing global economy, weakened by levels of private and public debt higher than before the global financial crisis. The failure to restructure the global economy after the crisis, combined with policy failures means that a crisis of the globally interconnected economy is inevitable.

Christopher Pissarides, professor, LSE

We need more firm action on Brexit. The government should say now that Britain remains in the EU as at present until a free-trade deal is worked out. It will probably be voted down by the Tories but the opposition parties should support it.

Jonathan Portes, professor, King’s College London

Short-term economic forecasts for the UK are currently contingent on short-term political forecasts about Brexit. And as William Goldman (who died a few weeks ago) said, “nobody knows anything”. But, even abstracting from Brexit, the UK economy, like the global economy, is not in great shape. While overall inequality has been relatively stable (although may now be rising), levels of deprivation are a disgrace for a relatively rich, advanced developed economy. By prioritising short-term deficit reduction (in some cases via transparent accounting fiddles, as with the student loans fiasco, now reversed by ONS) over long-term sustainability, the government has left a poisonous legacy for anyone, from whatever party, who wants to be honest with the public about fiscal choices. The flexible labour market (largely a legacy of policy choices from the mid-1980s on) has delivered close to “full employment” but the current model is clearly not sustainable. And we are no closer to working out how to overcome the chronic short-termism of British business and government. Other than that, everything is fine. Happy New Year!

Sonali Punhani, Credit Suisse

On Brexit, our central scenario is that a soft Brexit deal is more likely than the UK exiting without a deal. But the path to a deal is likely to involve further UK domestic political stress.

Ricardo Reis, LSE

It is the end of 2018, and we still don’t know what Britain’s relations with its main trading partner will be in four months’ time. It is hard to make economic forecasts when the overwhelming source of uncertainty is the evolution of domestic politics, which all the political experts on TV say right now could move in radically different ways.

Andrew Simms, co-director, New Weather Institute

Especially in the 10th anniversary of the full-blown financial crash of 2008, we should never again blunder so blindly into a foreseeable crisis. And yet we are doing so, on an even greater scale and with potentially far more dire consequences, in the blind spot we show in not understanding the economy’s absolute dependence on a healthy, functioning biosphere. Late in 2018, the Intergovernmental Panel on Climate Change published its much awaited report on how to meet the international target of limiting global warming to 1.5 degrees centigrade. Its scientific conclusion was that to prevent such climate breakdown would require “rapid, far-reaching and unprecedented changes in all aspects of society”.

In response, and ironically to coincide with the launch of the government’s own “Green GB Week”, official backing for fracking for fossil fuels was given the green light, plans were announced for a huge new road in the south-east, incentives for electric vehicles withered, while the expansion of Heathrow airport remains a priority and it emerged that Gatwick airport is trying to expand too by bringing a back-up runway into use. Something fundamental is wrong. Elsewhere, the head of the oil company Shell responded to the new climate science by stating that “Shell’s core business is, and will be for the foreseeable future, very much in oil and gas”. Separately, BP announced new North Sea oil projects.

Economic choices are being made, both public and private, that will have the effect of accelerating a catastrophic climate breakdown, when we should be aggressively pursuing innovation to transform the economy to thrive within planetary ecological boundaries. In spite of the publication in 2017 of the UK’s first explicit industrial strategy in ages, subtitled “building a Britain fit for the future”, and an update in 2018 focused on the “grand challenges” which included the pledge to lead the world “in the development, manufacture and use of low carbon technologies”, the government has acted with an almost single minded purpose to undermine and disable the green energy technology sectors. In terms of long-term consequences for humanity, rather than just Britain’s place in Europe, the Brexit deadline, while critical, is trifling in comparison with the deadline to act to prevent climate breakdown.

What would action look like that might even begin to create the conditions for the rapid economic transition we need? Fifty years ago the world acted swiftly to agree a nuclear non proliferation treaty. In December 2018, the former US Defense Secretary, William Perry, said that the climate threat compares to nuclear war.

I recently proposed with my colleague Prof Peter Newell, that we now needed an equivalent Fossil Fuel Non Proliferation Treaty, to draw a line in the sand on any further expansion of fossil fuel energy and its dependent infrastructure. The City of London remains a major centre of fossil fuel financing and such a change in direction would do more to redirect energy to vital and productive innovation to “future proof” the UK than anything else. Rather than creating self-imposed shocks like Brexit, or waiting for the next extreme weather event to hit, we should be learning from our proven ability to bring about successful, rapid transitions in a wide range of circumstances and planning ahead.

Anybody interested in learning such lessons, and contributing their own ideas to them, can look at the new Rapid Transition Alliance initiative — that a range of forward looking organisations, including my own, have set up to do so. It provides some evidence-based hope in a warming world, not to mention a country sinking in Brexit-driven confusion.

Nina Skero, director and head of macroeconomics, CEBR

The biggest negative economic factor from Brexit could be the loss of talented people. Britain will need to ensure that whatever happens, employers still have access to a pool of talent without excessive immigration bureaucracy and costs.

Andrew Smithers, author

The Brexit debate has drowned out the UK’s real problem which is that companies are investing too little due to the perverse incentives on management arising from the bonus culture. I am sorry that the FT continues to ignore this issue.

Gary Styles, director, GPS Economics

2018 has been an extraordinary year. Perhaps 2019 will also surprise us all and we will get a clear parliamentary vote for a European deal the vast majority of the country can support. The economy, markets and the public need a speedy resolution regardless of the final deal.

Suren Thiru, head of economics and business finance, British Chambers of Commerce

The downside risks to the UK’s economic outlook remain uncomfortably high. A disorderly departure from the EU would likely deliver a significant negative shock to the UK economy, materially weakening the near-term growth and productive potential. On the upside, greater clarity and precision over the UK’s future relationship with the EU and with other key markets should help drive an upturn in economic conditions, including stronger investment intentions.

John Van Reenen, professor, MIT economics department and Sloan management school

Here’s my take on the best course of action for parliament and the country to take: “Britain deserves a second chance”.

Peter Westaway, chief economist, Vanguard Asset Management

It is important not to forget that the UK economy will continue to be affected by all the usual factors that would affect a smallish open economy at this stage of the cycle. As such, even though a global recession is not our main case prediction, the chances of a slowdown caused by a sharp market correction, intensifying trade wars, a China slowdown or increased stresses in European sovereign markets are all present. At some point, policymakers and market investors in the UK will need to re-focus their attention on business as usual matters. But without doubt, if Brexit does go ahead, that is likely to be the predominant negative influence on economic prospects in the UK for some years to come.

Mike Wickens, professor, University of York

Despite the incessant articles in the FT to the contrary, Brexit has never been about the economy. I wish that the FT would realise that it is mainly about the politics of being in a system that is moving as fast as it can towards political integration and so give its readers some analysis of this — even though it is two years too late.

Trevor Williams, visiting professor, University of Derby

Financial markets will face further turmoil, with equities lower. The yield curve is likely to flatten and short and long-term rates fall. An inverted tied curve cannot be ruled out. For sure, the housing market will soften further — with transactions volumes lower and prices sagging, especially in London and high immigration areas, as demand softens and domestic buyers feel the squeeze from rising unaffordability. The weakness of M4 money supply growth does not bode well for growth. As such, the conditions for a slide in the currency towards $1.20 against the US dollar is very possible.

Alastair Winter, chief economist, Daniel Stewart & Company

The above answers are in the context of slowing global growth, particularly in China and less markedly in the US. Getting Brexit out of the way should help the UK and other Northern European economies. Equity markets are unlikely either to prosper or to crash and the FTSE 350 should fare better than most. Sterling is likely to appreciate across the board in 2019 perhaps reaching $1.50 and €1.20.

Linda Yueh, adjunct professor of economics, London Business School

The US-China trade war is likely to rumble on through the first quarter of the year, so that will also increase import price pressures in the UK and potentially deter big M&A deals. The US and China as well as the EU has to approve merger and acquisition deals. By not acting, China’s antitrust authority scuppered US tech company Qualcomm’s $44bn bid to buy Dutch chipmaker NXP. China says they’re open to approving it now as part of the trade discussions with the US, but Qualcomm has paid NXP a $2bn break-up fee and said the deal won’t be revived. This high profile casualty of the trade war won’t go unnoticed among multinational companies.

Garry Young, NIESR

Chelsea will win the cup.

Les économistes prédisent la trajectoire de l’économie britannique en 2019
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