The European Commission predicted that British GDP will expand by 1.5 per cent in 2017
In its Winter Economic Forecast, the European Commission predicted that British GDP will expand by 1.5 per cent in 2017.
The figure was significantly revised upwards from a 1 per cent prediction made last autumn in the aftermath of the referendum decision to leave the bloc.
However, the forecast was still below the 2.1 per cent GDP growth predicted by the commission before the Brexit vote.
And the officials went on to claim that the impact of the referendum outcome "had yet to be felt", going on to warned that growth could slow down next year.
The UK had 'maintained momentum' since the historic vote to quit the EU
I very glad they have taken a more balanced view of the economy
MPs last night welcomed the commission's more optimistic revision for this year.
Former Tory Cabinet minister John Redwood: "I very glad they have taken a more balanced view of the economy.
"It is a pity they couldn't have done that before people had their vote."
And Tory backbencher Maria Caulfield, a member of the Commons EU Exit Committee, said: "The GDP growth forecasts are welcome news and this must finally be the nail in the coffin for project fears' predications that Brexit would damage the economy."
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The commission claimed the UK economy would slow to 1.2 per cent next year
The 1.5 per cent expansion for the UK compared with 1.6 per cent across the EU forecast by the commission for 2017, up from a 1.5 per cent figure in the Autumn Forecast.
The commission claimed the UK economy would slow to 1.2 per cent next year and be overtaken by the 1.8 per cent expected across the EU.
Giving its verdict on the UK economy since the Brexit decision, the Winter Economic Forecast said: "The impact of the vote, by the UK to leave the EU in the referendum held on 23 June 2016 on growth has yet to be felt."
It added: "The economy has maintained momentum since the referendum."
The Economic Forecast named Brexit as one of a series of factors creating an "extraordinarily high level" of economic uncertainty, alongside the upcoming elections in key EU states including France, the possibility of protectionist trade policies in the US under Donald Trump and a "mounting backlash against globalisation" around the world.
The forecast named Brexit as one of the factors creating economic uncertainty
But it said that global GDP growth is thought to have hit its low point last year and will strengthen this year and next, with growth outside the EU projected to pick up gradually from 3.2 per cent in 2016 to 3.7 per cent in 2017 and 3.9 per cent in 2018.
The report forecast falling business investment and rising inflation in the UK over the period, while growth in disposable incomes and household consumption is expected to weaken.
Yet it also predicted that UK exports will grow thanks to the decline in the value of sterling following the Brexit vote.
Growth in the UK has been "unbalanced" since last year's referendum, with healthy figures largely driven by consumers cutting back on saving in order to spend, said the report.
Private consumption growth is expected to be scaled back over the course of this year, as wages fail to keep pace with UK inflation, which is forecast to rise "rapidly and significantly" to 2.5 per cent in 2017 and 2.6 per cent in 2018.
And business investment is predicted to slow throughout 2017 as "rising uncertainty deters businesses from investing at recent rates".
The report warned: "Given the lag between decisions to invest and actual investment, the impact of the result of the EU referendum is expected to become apparent later in 2017."
Pierre Moscovici, Commissioner for Economic and Financial Affairs, Taxation and Customs, said: "The European economy has proven resilient to the numerous shocks it has experienced over the past year.
"Growth is holding up and unemployment and deficits are heading lower.
"Yet with uncertainty at such high levels, it's more important than ever that we use all policy tools to support growth.
"Above all, we must ensure that its benefits are felt in all parts of the euro area and all segments of society."
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Valdis Dombrovskis, Vice-President for the Euro and Social Dialogue, also in charge of Financial Stability, Financial Services and Capital Markets Union, said: "The economic recovery in Europe continues for the fifth consecutive year.
"In these uncertain times, however, it is important that European economies stay competitive and able to adapt to changing circumstances. This requires continued structural reform effort.
"We also need to focus on inclusive growth, ensuring that the recovery is felt by all.
"With inflation picking up from low levels, we cannot expect current monetary stimulus to last forever.
"Therefore countries with high deficit and debt levels should continue bringing them down to become more resilient to economic shocks."
John Longworth, co-chairman of the anti-Brussels pressure group Leave Means Leave, said: “Bitter from the democratic decision taken by the British people to leave the crumbling EU project, unelected bureaucrats predictably talked down Britain’s economic prospects.
“The revelation that the EU Commission have been forced to admit they were wrong and now upgrade UK growth forecasts shows how they are completely misguided and that their gloomy predictions are not to be trusted.
“The economic evidence available since the EU referendum has demonstrated that the British economy is doing extremely well and this is before the huge benefits of Brexit are implemented.”