Brexit: 'Sharp slowdown in economic growth' predicted amid post-referendum uncertainty, experts warn
'Although individual businesses continue to report strong trading conditions, the overall picture suggests a sharp slowdown in UK growth lies ahead'
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Your support makes all the difference.A leading business group has slashed its forecast for economic growth amid predictions the UK faces a “sharp slowdown” following Brexit.
The British Chambers of Commerce (BCC) warned mounting political and economic uncertainty is likely to hit investment at the same time as consumer spending being “stifled”, combining “to put a brake on investment”.
The organisation said the UK is likely to avoid a recession, but warned firms were still digesting the referendum result, implying the results of Brexit may not all become immediately apparent.
It downgraded its growth forecast from 2.2% to 1.8% this year, from 2.3% to 1% next year and from 2.4% to 1.8% in 2018.
Export growth is expected to fall to 2.3% this year from 4.8% in 2015, but slowly grow to 4% by 2018, it was predicted.
Despite Prime Minister Theresa May’s much derided aphorism that “Brexit means Brexit”, the detail of what happens next following the referendum result remains unclear. Analysts have warned this uncertainty and lack of clarity could add to the economic stagnation.
Dr Adam Marshall, acting director-general of the BCC said: “Although individual businesses continue to report strong trading conditions, the overall picture suggests a sharp slowdown in UK growth lies ahead.
“Our forecast suggests that the UK is likely to avoid a recession, but with the health warning that businesses are still digesting the result of June's EU referendum and the challenges and opportunities to come.
“The value of Sterling, the shape of future trade relationships, the status of EU nationals in the UK workforce and other factors will all influence business confidence over the coming quarters.
“Stability, clarity and action must continue to be the watchwords for government. Aside from a clear timetable for negotiations with the EU, ministers must act to support business investment and confidence.
“They should start with the long list of business-boosting infrastructure projects that have been put on hold for far too long - including a firm decision on a new airport runway, new nuclear investment, and road and rail schemes.
“We also need to see policies to encourage business investment, such as revisions to our outdated business rates system, which penalises companies for investment in plant and machinery, and hits firms before they have even turned over a penny.”
Suren Thiru, BCC head of economics, added: “The downgrades to our growth forecast confirm that the UK economy is set to enter a turbulent period, with growth expected to weaken materially in the near term.
“Mounting uncertainty is likely to put a brake on investment, while rising inflation and moderately weaker labour market conditions are expected to stifle consumer spending. On the upside, the UK's net trade position is expected to be boosted by the post-referendum slide in the value of Sterling.
With additional reporting by PA
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