Just less than half of UK firms think the country will go into recession this year, a new survey has shown, despite evidence of a rise in business confidence following December’s General Election.
British firms cited increased geopolitical tensions such as trade tariffs, Brexit and regional instability as the number one risk to businesses in 2020, the survey from trade finance provider Stenn showed.
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The UK economy has not suffered a recession – two consecutive quarters of contraction – since the Eurozone crisis in 2012.
Yet UK economy slowed towards the end of 2019, survey data has indicated, under the weight of General Election and Brexit uncertainty.
Many analysts and firms are predicting that the UK economy will recover somewhat following Boris Johnson’s General Election victory, which means Britain will leave the European Union at the end of the month.
“Boris Johnson’s election result provided some much-needed solidity the UK has been craving and with Brexit confirmed to go ahead,” said Kerstin Braun, president of the Stenn Group.
Yet she said firms were worried about what kind of economic deal the upcoming negotiations with the EU would deliver.
“The prolonged uncertainty has been battling the UK economy and many businesses are concerned Brexit could cause the economy to shrink in 2020,” she said.
Business investment fell in 2019 as firms refused to commit to long-term projects due to uncertainty. This could damage the economy in 2020.
Braun said it is “vital” that “UK firms start investing again as they exit Brexit limbo. This is critical for long-term growth”.
She predicted that “if current political and economic uncertainties ease, we could see a gradual revival in activity over the course of the year, likely by one or two per cent”.