Mubasher: The UK is expected to witness low economic growth over the next three years, while the failure to reach a divorce deal with the European Union (EU) could be one more turn of the screw on the British government, the EY Item Club has said.

The leading economic forecaster expects Britain’s gross domestic product (GDP) growth to register 1.3% this year and 1.5% in 2019, down from 1.4% and 1.6%, respectively in its previous outlook released in July.

The EY Item Club noted that these figures these figures were based on the presumption that the UK and the EU would reach a deal over transition terms, but if this did not happen, conditions could be “significantly weaker”.

This year would be the worst year of growth for Britain’s economy since the financial crisis if the forecaster’s projection turns out to be accurate, according to BBC News.

“Heightened uncertainties in the run-up to and the aftermath of the UK’s exit could fuel business and consumer caution,” Howard Archer, chief economic adviser to the EY Item Club, commented.

This key factor propels us to slash the EY Item Club’s GDP forecasts for 2018 and 2019, he said.

Earlier this year, the EY Item Club expected that the Bank of England would make two interest rate rises this year and two more in the next year.

However, following the British central bank’s August decision to increase rates from 0.5% to 0.75%, the forecaster said it did not now expect another rise until August 2019, with two more rate rises likely in 2020.

“The UK economy is going to experience a period of low economic growth for at least the next three years, and businesses need to recognise this and adjust accordingly,” EY chief economist Mark Gregory said.