UK growth is stagnating as a result of heightened Brexit uncertainty and other economic pressures, the British Chambers of Commerce (BCC) has warned.
The finding forms part of the business body’s quarterly economic survey – the UK’s largest private sector survey of business sentiment and an indicator of UK GDP growth.
The report suggests that current levels of uncertainty are having a stalling effect on growth in domestic sales, and as a result, firms are seeing orders reduced, recruitment difficulties and price pressures.
In the services sector, for example, firms reporting an increase in domestic sales and orders have dropped to a two-year low.
Likewise, reported recruitment difficulties in the manufacturing and services sector have risen to the joint highest level on record. In fact, more than four in five (81 per cent) manufacturers now report difficulties in finding the right staff.
Cash flow, too, continues to be a major concern for both sectors, with the balance of firms reporting improved cash flow “remaining weak”.
Commenting on the report, Suren Thiru, Head of Economics at the BCC, said: “Our latest survey suggests that UK economic conditions were worryingly subdued in the final quarter of 2018, with a number of key indicators continuing to weaken under the weight of persistent Brexit uncertainty and rising cost pressures.
“The marked increase in cost pressures for businesses in the quarter suggests that inflation will be higher over the near term, with the continued weakness in sterling maintaining the upward trend on the cost of imported raw materials. However, with our results also showing that price pressures from wage settlements remain relatively muted, there continues to be sufficient scope to keep interest rates on hold in 2019, particularly given the significant economic and political turbulence.”
Dr Adam Marshall, Director General of the BCC, added: “Brexit is hoovering up all of the government’s attention and resources, but it’s far from the only cause of uncertainty. Given the magnitude of the recruitment difficulties faced by firms clear across the UK, business concerns about the government’s recent blueprint for future immigration rules must be taken seriously – and companies must be able to access skills at all levels without heavy costs or bureaucracy.”