Growth in the UK’s private sector stagnated in the quarter to February and activity could be set to fall in the coming months.
A Confederation of British Industry (CBI) survey revealed the balance of distribution, manufacturing and services firms reporting growth had fallen to -3 per cent – its weakest since April 2013.
It was the fourth consecutive month of no growth in activity.
Falling services volumes and slower manufacturing growth hindered activity, despite a rebound in distribution, the CBI said, as businesses prepared for a potential no-deal Brexit.
The majority of the 650 companies surveyed expected activity to fall slightly in the three months to May, with services volumes falling at a sharper pace.
Distribution volumes could be set to grow, however, through a recovery in retail sales.
CBI chief economist Rain Newton-Smith said: “Economic momentum is ebbing away as consumer confidence weakens and businesses brace themselves for the possibility of a no-deal Brexit.
“More and more companies are hitting the brakes on investment and day-to-day business decisions are becoming increasingly problematic.
The CBI provided an outlook of “tepid growth” as Brexit uncertainty continues to weigh on investment.
It said conditions would remain challenging for retailers due to subdued household spending.