British firms slash investment by most in a decade as Brexit uncertainty continues, BCC says
UK companies plan to cut investment in favour of stockpiling resources as Brexit drags on, according to a recent survey by the British Chamber of Commerce.
British businesses look to cut investment by the most in 10 years in 2019 as Brexit uncertainty continues, threatening UK economic growth in the process, a recent survey by the British Chamber of Commerce (BCC) said.
The continued Brexit impasse, including the growing possibility of a no-deal exit, together with the high upfront cost of doing business in the UK and the running down of excess stock, is expected to suffocate investment activity over the near term.
Forecasts for business investment growth were downgraded to -1.3% for 2019, from -1.0% and to 0.4% for 2020, down from 0.6%, the survey said.
Meanwhile, UK GDP growth in 2019 was upgraded from 1.2% to 1.3% and downgraded from 1.3% to 1% in 2020. However, the BCC said that its forecasts assume that the UK avoids a disorderly Brexit.
BCC urges next PM to break Brexit deadlock
The BCC’s latest forecast is a clear warning sign that the next Prime Minister must set out a clear roadmap for how the political impasse in Westminster can be broken and an agreement reached to prevent further slowdown in the economy.
‘The downward pressure on business activity and investment intentions from the unwinding of stocks is likely to be exacerbated somewhat by increasing cost pressures and Brexit uncertainty, slowing overall economic growth across the forecast period,’ Head of Economics at the BCC Suren Thiru said.
‘A messy and disorderly exit from the EU remains the main downside risk to the UK’s economic outlook as the disruption caused would increase the likelihood of the UK’s weak growth trajectory translating into a more pronounced deterioration in economic conditions,’ he added.
British firms stockpile resources ahead of Brexit
As the probability of a no-deal Brexit continues to increase, British businesses begun formulating contingency plans that include stockpiling of resources rather than investing in new ventures that could help fuel economic growth.
‘The UK’s low-growth trajectory makes clear that we can’t afford for Westminster to keep turning a blind eye to the domestic agenda,’ Director General of the BCC Adam Marshall said.
Businesses will be expecting the government to take action in the upcoming Comprehensive Spending Review to alleviate the heavy burden of upfront costs, which stunt growth, Marshall added.
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