UK growth forecasts downgraded due to Brexit, new BCC figures reveal

UK economic growth forecasts have been downgraded to ‘snail’s pace’ because Brexit uncertainty has led to a weaker outlook for trade and investment, the British Chambers of Commerce said.

The BCC’s latest forecasts puts expectations for GDP growth in 2018 at 1.1 per cent, down from 1.3 per cent, while GDP growth for 2019 is forecast at 1.3 per cent, down from 1.4 per cent.

The UK economy picked up speed in the three months to July, with GDP expanding by 0.6 per cent, up from 0.4 per cent, according to the most recent data from the Office for National Statistics, which attribute the higher growth rate to the recent warm weather and the World Cup.

The BCC said its downgrades to GDP forecasts “have been largely driven by a weaker outlook for trade and investment”.

“Exporters face more subdued growth given continued Brexit uncertainty and the expected slower growth in key markets. As a consequence, net trade is expected to make a negative contribution to GDP growth over the forecast period.”

The group said a no-deal Brexit would lead to further slowing in the economy, and said the government needs to take drastic action to bolster confidence and promote investment.

Adam Marshall, director general of the BCC, said: “Despite strong performances by some firms, the UK economy as a whole is set to grow at a snail’s pace. Brexit uncertainty continues to weigh heavily on many firms, as most of the practical questions facing trading businesses remain unanswered.

“The lack of precision on the nature of the UK’s future relationship with the EU is lowering expectations for both business investment and export growth.”

Mr Marshall added: “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.

“A deal with Brussels won’t deliver stronger UK growth on its own. The Prime Minister and the Chancellor must now pull out all the stops here at home to bolster business confidence, slash costs, and crowd in investment. At a time of massive change and uncertainty, business would not forgive a timid ‘business as usual’ Autumn Budget, nor tax hikes that make UK companies less competitive around the world.”