Welcome to the 9am Lowdown – today’s headlines feature short, sharp shocks, accountancy bodies and the re-emergence of George Osborne…
Short, sharp shock for UK economy
The UK economy faces “a very different path to the one expected three months ago”, according to think-tank EY Item Club.
The economic focus group is forecasting GDP growth of 1.9% this year (down from the 2.3% it predicted in April) and expects growth of just 0.4% in 2017 (down from 2.6%). Business investment is expected to see a larger relative hit, falling by 0.9% in 2016 and by 2% in 2017 – down from Aprils’ forecast of growth of 3.2% and 7.8% respectively.
Commenting on the forecast Peter Spencer, Item Club’s chief economic adviser said: “Longer-term, the UK may have to adjust to a permanent reduction in the size of the economy, compared with the trend that seemed possible prior to the vote.”
However, there was a bright spot for the UK economy in the form of exports. Reflecting the fall in the pound and the weakness in domestic demand, the group predicts that exports will increase by 3.4% in 2017 while imports will fall by 0.3%. Consequently, the forecast expects net exports to add 1.1% to GDP next year, the strongest contribution from this source in six years.
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CIMA, CIPFA and ICAS in arrangement discussions
Accountancy bodies CIMA, CIPFA and ICAS have announced that they are in discussions about a deal offering routes to each other’s qualifications.
Although talks have been ongoing for some time regarding access to CIMA membership for ICAS members, the bodies are also looking at other ways they “can work together for the benefit of their members and the profession”. However, all bodies denied that the talks signalled a potential merger.
Commenting on the talks, ICAS chief executive Anton Colella said, “We are excited to be in discussions with CIMA about the potential for opening up membership and CGMA designation opportunities to our members, and to be exploring further reciprocal arrangements.”
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Former Chancellor George Osborne has made his first major public appearance since losing his job as Chancellor. Delivering the Margaret Thatcher lecture at the Guildhall in London, Osborne used the speech to send a number of messages to Philip Hammond, his successor at Number 11.
First, he urged the government to retain fiscal responsibility if the economy is to grow and keep the faith of international investors. He also insisted that Theresa May’s new government must be "pro-business", and retain its enthusiasm for the Northern Powerhouse, a project that was a particular favourite of Osborne’s.
Although he campaign hard for the UK to remain part of the EU, Osborne argued that despite the leave vote the country should “reach out to the world”, and forge as close a link as possible to the rest of the European Union.