An influential think tank has sent out a warning to the aerospace industry as it forecast Britain should brace itself for a growth slowdown.
The EY Item Club says falling consumer spending and business investment will apply the brakes to the UK economy.
And it warned that sectors like the aerospace industry, which employs more than 10,000 people directly in Lancashire, is vulnerable as a result of the UK’s Brexit vote.
It said the UK economy will stump up gross domestic product (GDP) growth of 1.9 per cent this year.
That will be fuelled by a 2.5 per cent rise in consumer spending on the back of low inflation.
However, this performance is expected to fizzle out, as inflation jumps 2.6 per cent next year and 1.8 per cent in 2018, causing consumer spending to slump to 0.5 per cent and 0.9 per cent respectively.
Business investment is also slated to take a hefty knock from uncertainty surrounding Britain’s future trading relationship with the EU, dropping 1.5 per cent this year and more than two per cent in 2017.
Peter Spencer, chief economic advisor to the EY Item Club, said: “So far it might look like the economy is taking Brexit in its stride, but this picture is deceptive.
“Sterling’s shaky performance this month provides a timely reminder that challenges lie ahead.”
He added: “With activity in the domestic market flat, GDP growth will become heavily dependent upon exports next year. But once the UK has left the EU certain sectors, such as aerospace, automotive, and chemicals that trade extensively with the EU will be a lot more vulnerable and may need to be supported by subsidies and more robust industrial policies.”
BAE Systems, which has sites at Warton and Samlesbury, has said it is not unduly worried by the effect the Brexit vote might have on its worldwide sales of the Eurofighter Typhoon and Hawk and other services. A BAE Systems spokesman said today: “We respect the decision by the British people to leave the EU.
“While we await the outcome of the UK’s negotiations with the EU, we do not anticipate any immediate or material direct impact on our business.”