In what promises to be another eventful year, John Hawksworth, chief economist at PwC, said: "The UK led the G7 rankings in 2016 with GDP growth of around 2%, but is expected to fall back to a middling position in 2017 as growth slows to around 1-1.5%.
"This reflect the gradual drag on business investment from Brexit-related uncertainty, as well as the squeeze on real household spending power from the weaker pound.
"We are not predicting a recession and parts of the UK economy should remain relatively strong, particularly in the consumer services, tourism and technology sectors.
"But manufacturing and construction may continue to struggle and the City could suffer some loss of business to other EU countries due to the anticipated impact of Brexit
"We expect a key feature of 2017 to be a re-emergence of inflation, which we expect to rise to around 2.5-3% by the end of the year, squeezing real earnings growth.
"This pay restraint should, however, also help to avoid any significant rise in unemployment.
"We expect the Bank of England to keep interest rates on hold for at least the first half of 2017, waiting to see how the economic impact of Brexit unfolds.
"After boosting public investment in his Autumn Statement, the Chancellor is also likely to be in ‘wait and see’ mode in what could be a relatively boring Budget in March." ■
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