A fall in investment because of continued uncertainty as the date of Brexit fast approaches has weakened the UK’s economic growth outlook, according to an influential business lobby group.
Economists at the British Chambers of Commerce (BCC) say growth will slow to 1.1 per cent this year, in forecasts to be published today, a downgrade from their previous prediction of 1.3 per cent. That would represent the slowest rate of economic growth since the recession of 2009 caused by the global financial crisis.
The government’s forecasters, the Office for Budget Responsibility, predict growth of 1.5 per cent this year, down from 1.7 per cent last year.
Adam Marshall, the group’s director general, said the UK economy is slowing to a “snail’s pace” because of the lingering doubts over the future of UK trade with the EU.
While trade arrangements have not yet been impacted, the government has repeatedly warned that it is prepared to leave without a deal, an outcome which horrifies the heads of most of the UK’s major business groups.
Survey evidence from data providers such as IHS Markit as well as the BCC suggests the uncertainty ahead of the 29 March exit date is already having a significant effect on investment.
Under the forecast, total investment will rise by 1.4 per cent in 2018, down from 1.8 per cent previously.
Jaguar Land Rover’s boss, Ralf Speth, last week warned that a no-deal Brexit would cause a hit to investment.
Marshall said: “The drag effect on investment and trade would intensify in the event of a ‘messy’ and disorderly Brexit. Businesses need the Brexit negotiations to deliver clarity, precision and results at pace over the coming weeks.”