The British Chambers of Commerce (BCC) has this month downgraded its growth expectations for the UK economy in response to “continued Brexit uncertainty”.
In its quarterly economic forecast for Q1 2019, the figures show that UK GDP growth has been reduced to 1.2 per cent in 2019 and 1.3 per cent in 2020 as a result of “weak business investment” and uncertainty around future trading policies.
The estimated figure for GDP growth in 2019 would represent the “weakest growth” in more than a decade, said the BCC.
It added that a weaker outlook for business investment and trade “amid continued Brexit uncertainty” and slower than expected global economic growth were the “main drivers” behind the downgrades to GDP growth.
The research also reveals that business investment is forecast to decline to one per cent, described as the “weakest outturn” since the financial crisis in 2009. Likewise, the BCC estimates that net trade is expected to make a “negative contribution to GDP growth” over the same period, in response to a lack of clarity on the UK’s future trade arrangements and other global trade tensions.
Accordingly, export growth is forecast at 1.8 per cent, 1.7 per cent, and 1.7 per cent, compared to import growth of two per cent, 2.2 per cent, and 2.3 per cent respectively.
Suren Thiru, Head of Economics at the BCC, said: “The downgrades to our near-term growth outlook are a further indication that the UK economy is set to remain on a historically weak growth trajectory for some time to come unless decisive action is taken.
“Brexit uncertainty, the financial squeeze on business and consumers and a slowing global economy are expected to weigh significantly on business investment and trade and limit the extent to which consumer spending will be boosted by a stronger real wage growth.”
Echoing the BCC’s views, Adam Marshall, Director General of the British Chambers of Commerce, added: “It is clear that political inaction has already had economic consequences, with many firms hitting the brakes on investment and recruitment decisions as a result of ongoing uncertainty. Worse still, some companies have moved investment and growth plans as part of their contingency preparations. Some of this investment may never come back to the UK.”