Bri­tish econ­omy los­ing steam as in­vest­ment wilts: Sur­veys

Kuwait Times - - BUSINESS -

Bri­tain’s econ­omy ap­pears to be los­ing steam, with ma­jor busi­ness sur­veys show­ing a marked slow­down in the ser­vices sec­tor and board­rooms be­set by doubt about the fu­ture fol­low­ing the coun­try’s vote to leave the Euro­pean Union.

The sur­veys re­leased yes­ter­day will heighten con­cerns about the longer-term prospects of the econ­omy which has so far fared bet­ter than most econ­o­mists ex­pected since June’s Brexit vote. That ini­tial re­silience has been driven mostly by con­sumers who largely took the ref­er­en­dum re­sult in their stride, but the signs of weak in­vest­ment in­ten­tions in the sur­veys sug­gest com­pa­nies are much more ner­vous. Busi­ness in­vest­ment and turnover con­fi­dence hit four-year lows, the Bri­tish Cham­bers of Com­merce (BCC) said in a quar­terly sur­vey of 7,000 busi­nesses, the largest of its kind.

Sep­a­rately, chief fi­nan­cial of­fi­cers in ma­jor Bri­tish firms re­ported only a par­tial re­bound in busi­ness morale after a post-Brexit vote nose­dive, ac­coun­tants Deloitte re­ported. Both sur­veys were con­ducted be­fore the govern­ment alarmed em­ploy­ers and fi­nan­cial mar­kets last week by out­lin­ing plans to force busi­nesses to list the pro­por­tion of for­eign staff and “flush out” firms not do­ing enough to hire Bri­tish work­ers. After fierce crit­i­cism from busi­ness groups, the govern­ment de­nied it wanted to “name and shame” com­pa­nies. The con­fu­sion com­pounded wor­ries among in­vestors about the de­gree of ac­cess Bri­tish ex­porters will have to the EU. Fears about a so-called “hard Brexit” without free ac­cess helped pushed ster­ling to a fresh 31-year low against the dol­lar last week.

The BCC sur­vey sug­gested the weak pound has boosted ex­ports for man­u­fac­tur­ers. But it also pointed to a slow­down among ser­vices firms that form the back­bone of Bri­tain’s econ­omy. “The slow­down in ser­vices is con­cern­ing be­cause it ob­vi­ously is the dom­i­nant sec­tor in the UK econ­omy,” Adam Mar­shall, the BCC’s act­ing di­rec­tor gen­eral, told Reuters.

In­vestors have be­come in­creas­ingly doubt­ful that the Bank of Eng­land will cut in­ter­est rates again this year, given ro­bust con­sumer spend­ing and ster­ling’s re­newed plunge. But pol­i­cy­mak­ers will re­gard the BCC and Deloitte sur­veys as con­sis­tent with their view that the econ­omy will slow markedly.

The BCC said its lat­est sur­vey, con­ducted be­tween Aug 22 and Sept 12, sup­ported its fore­cast that the econ­omy will grow by just 1 per­cent next year, half its re­cent av­er­age. Man­u­fac­tur­ers’ plans for spend­ing on plant and ma­chin­ery and ser­vice sec­tor in­vest­ment in staff train­ing fell to their low­est lev­els since 2012 when the econ­omy was close to re­ces­sion.

“It makes it all the more im­por­tant that the Au­tumn State­ment de­liv­ers pos­i­tive steps to ‘crowd in’ busi­ness in­vest­ment and build busi­ness con­fi­dence,” Mar­shall said. — Reuters

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