• Our forecast of world output growth this year is unchanged at 3.0 per cent – the slowest annual growth rate since the 2009 recession. World growth is expected to strengthen to 3.2 per cent next year and 3.6 per cent in 2018, but to remain slower than before the global financial crisis.

• Downside risks to the forecast include economic downturns in the advanced economies that central banks may lack ammunition to counter, as well as financial instability as a result of low and negative interest rates. These point to a need for more balanced policies to promote expansion, with fiscal policy playing a greater role.

• With trade growth in recent years already reduced to half its pre-crisis rate, action to resist protectionist pressure and to promote further progress with international economic integration is vital.

• The economy will grow 2 per cent in 2016 before slowing to 1.4 per cent in 2017: with the triggering of Article 50 there are downside risks to next year's outlook.

• Consumer price inflation will accelerate, peaking at around 4 per cent in the second half of 2017, and this will impact on real disposable income

• The Monetary Policy Committee is expected to look through this near-term inflation and hold Bank Rate at ¼ per cent until 2019.

• Sterling is expected to remain at around $1.22 and €1.11 this year and next.

The production of this forecast is supported by the Institute's Corporate Members: Bank of England, HM Treasury, Mizuho Research Institute Ltd, Office for National Statistics, Santander (UK) plc and by the members of the NiGEM users group.

The British people voted for Brexit for a variety of reasons. A literature is emerging that seeks to explain the outcome using the increasing amount of aggregate and individual data being generated. Less often considered is the impact those factors that shaped the referendum outcome might continue to exert on the debate about the UK's future relationship with the EU. We argue that they will continue to weigh on political debates. The continued resonance of the Leave message militates against anything but what has come to be known as a ‘hard Brexit’.

This paper examines the short and long-term impacts of the UK referendum on migration flows and migration policy. Even in the short term – before any policy change – the vote will affect migration flows directly and indirectly through both economic and other channels. Post Brexit, two key issues will need to be addressed. Will the UK preserve a substantial measure of preference for EU citizens in any new system? And will policy tilt in a liberal or restrictive direction?

This paper considers the agenda for UK trade negotiations over the post-Brexit period. There are several groups of countries that will need to be dealt with and we consider the priorities among them. Negotiations with the WTO and the EU are the most important and the most pressing in time, and should be pursued simultaneously. On the former, the UK must try quickly to establish its independent WTO status, which will be greatly facilitated by minimising the changes it proposes to its tariffs schedules. On the EU the UK needs to consider the choices between remaining in the customs union, creating an FTA with the EU and maintaining the ‘regulatory union’ that is the European Economic Area (EEA). Only when relations with the EU and WTO are clear will it be feasible to negotiate trade deals of various sorts with other countries, ranging from those with which we already have deals via the EU to those that currently trade with us on ‘WTO rules’. All of this takes time and we argue that it may be worth pursuing transitional arrangements to extend certain current trading arrangements a few years beyond Brexit in order to make time for serious negotiations.

One of the key issues facing the UK in the wake of the advisory referendum result to leave the European Union is the precise nature of its relationship with the European Union. At one extreme would be continued membership in the European Economic Area, including membership in the single market. Other options would be either no free trade agreement (FTA) with the EU at all or a less comprehensive FTA which stops short of single market membership. This paper compares the ability of EEA membership and less comprehensive FTAs to generate trade in goods and services. We investigate this question using empirical gravity model methodology and the most recent available data from 42 countries. We use recently developed econometric methods to deal with observations of zero trade flows and issues connected with endogeneity. The main finding is that while EEA membership is associated with substantial and statistically significant increases in bilateral services trade flows, membership in less comprehensive FTAs is not associated with any significant increase in bilateral services trade. For goods, EEA membership is associated with larger bilateral trade flows than are less comprehensive FTAs. These results suggest that it might be difficult to replace, on an exit from a European Union, lost trade flows with the EU by means of shallower FTAs with the EU or with third countries.

None of the existing models for the future trade policy relationship between the UK and the EU come with a predetermined foreign and security policy relationship. This article assesses how the future EU-UK foreign and security policy relationship might be organised post-Brexit. It provides evaluation of the current EU-UK interrelationship in the fields of the EU's Common Foreign and Security Policy (CFSP) and Common Security and Defence Policy (CSDP) and assesses the degree to which the UK is presently integrated into EU decision-making and implementation. It highlights that the UK needs to determine the degree to which it wants autonomy or even divergence from existing EU policies. The article concludes by rehearsing the costs and benefits of three possible future relationships between the UK and EU foreign, security and defence policy: integrated, associated or detached.