Brexit Means Economy Faces 50/50 Recession Chance

The UK has a 50/50 chance of falling into recession within the next 18 months following the Brexit vote, says a leading economic forecaster. 
The National Institute of Economic and Social Research (NIESR) says the country will go through a "marked economic slowdown" this year and next. 
It says inflation will also pick up, rising to 3% by the end of next year, the (BBC) reported. 
"This is the short-term economic consequence of the vote to leave the EU", Simon Kirby of the NIESR said. 
Overall the institute forecasts that the UK economy will probably grow by 1.7% this year but will expand by just 1% in 2017. 
This would see the UK avoid a technical recession, typically defined as two consecutive quarters of economic contraction. 
Kirby argued that the June referendum vote had led to such financial and political uncertainty that this would bear directly on the spending and investment decisions of both businesses and households. 
"We expect the UK to experience a marked economic slowdown in the second half of this year and throughout 2017," he said. 
"There is an evens chance of a 'technical' recession in the next 18 months, while there is an elevated risk of further deterioration in the near term." The pick-up in inflation to 3% will mainly be due to the recent fall in the value of the pound, but that should be ignored by the Bank of England the Institute said. 
"The Monetary Policy Committee should 'look through' this temporary rise in inflation and ease monetary policy substantially in the coming months," Kirby said. 
The institute forecasts that the Bank will reduce interest rates to just 0.1% eventually, after cutting them to 0.25% later this week.