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UK economy set to lag EU, US again as Brexit approaches

Britain’s economic growth is set to fall behind other developed economies again this year as it nears its exit from the European Union, according to new forecasts from a UK business organization.

The world’s fifth-largest economy looks likely to grow by 1.4 percent in 2018, weaker than projected growth in the EU of 2.2 percent and in the United States of 2.8 percent, according to the Confederation of British Industry (CBI).

Growth looks set to slow further to 1.3 percent in 2019, when it will again lag behind the euro zone and the United States, the CBI said.

The UK went from being the fastest-growing economy in the Group of Seven (G7) advanced economies to its slowest last year as the value of the pound fell after the Brexit referendum in 2016 and companies turned cautious about investment.

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The CBI argued before the Brexit referendum that staying in the EU would be best for Britain’s economy.

With less than a year to go before Britain is due to leave the EU, the CBI described the risks to the economy as “skewed to the downside”, especially if talks between London and Brussels on their new post-Brexit relationship turn sour.

The CBI said uncertainty over Brexit and the future of Britain’s relationship with the EU continued to weigh on corporate investment.

“There’s a huge amount of uncertainty in a lot of sectors about what our future relationship with the European Union will be,” said Rain Newton-Smith, the CBI’s chief economist. “That means it’s just harder to make those very long-term, capital intensive decisions. Businesses are still holding back.”

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In the United Kingdom’s 2016 referendum, 52 percent, or 17.4 million people, voted to leave the EU while 48 percent, or 16 million, voted to stay.

Several campaigns have emerged in recent months calling for a rerun of the EU referendum and putting pressure on British lawmakers to oppose a Brexit agreement.

By contrast, supporters of Brexit say attempts to stop Brexit run against the democratic will of the people and could thrust Britain into a constitutional crisis.

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