Slowdown in growth following vote for Brexit to last 'several years'

Britain will suffer a slowdown in economic growth for "several years" following its decision to break free of the European Union, according to a report.

The credit ratings agency Standard & Poor's said the Brexit vote will shave 2.1 percentage points off UK gross domestic product (GDP) by the end of 2018, but will not force the economy into recession.

Sterling's drop in value in the wake of the referendum result will boost GDP by around 1.2% in the middle of 2018 and drive a 7% rise in exports, the report said.

But it added that the the plunge in the pound would also take its toll on the economy, hampering purchasing power and consumption.

Jean-Michel Six, chief EMEA economist for S&P Global Ratings, said monetary policy, the property market and exports were key factors driving the direction of the UK economy.

"We expect the housing market to experience a soft landing in the coming 12 months, thanks to still very favourable financing conditions.

"A steeper fall would undoubtedly be associated with a sharper contraction in consumer demand and residential investment."

He added that the Bank of England's willingness to take action in the wake of the referendum result had appeased the gilt markets and prevented a steepening in the yield curve.

S&P has pencilled in UK GDP to grow by 1.8% this year, 1% next year and 1.1% in 2018. It said the UK economy would have grown by 1.9% in 2016, 2.1% in 2017, and 2% the year after if Britain had not voted to leave the EU.

It said the impact of the Brexit vote on the eurozone economy would be milder, trimming 0.7 percentage points off GDP between 2017 and 2018.

Speaking about the eurozone, he added: "Brexit occurred when the eurozone was struggling to find a second wind, now that the boost from very oil prices on spending power is vanishing, while investment remains hesitant and the effects of monetary policy are taking time to materialise."