Plea to Chan­cel­lor as sur­vey shows econ­omy flag­ging

● Lat­est Bri­tish Cham­bers of Com­merce snap­shot re­veals Brexit-buf­feted in­dus­try

The Scotsman - - Business - By SCOTT REID

Busi­ness lead­ers to­day called on the Chan­cel­lor to “in­cen­tivise in­vest­ment” and boost do­mes­tic growth in his up­com­ing Bud­get as a ma­jor sur­vey painted a gloomy pic­ture for the UK econ­omy.

Pub­lish­ing its lat­est eco­nomic sur­vey, which takes sound­ings from more than 7,000 busi­nesses, the Bri­tish Cham­bers of Com­merce (BCC) said the econ­omy had grown at a “muted” rate in the third quar­ter.

A man­u­fac­tur­ing boost had failed to stim­u­late growth, the mem­ber­ship or­gan­i­sa­tion added, as it de­manded ac­tion from Philip Ham­mond when he presents his au­tumn Bud­get on 22 Novem­ber. The Chan­cel­lor faces a tricky bal­anc­ing act amid con­flict­ing sig­nals on the un­der­ly­ing strength of the UK econ­omy, in­fla­tion­ary pres­sures and fears of a se­vere slow­down in the wake of a “no deal” over Brexit.

The BCC re­port showed that in the key ser­vices sec­tor – tra­di­tion­ally the main driver of Uke­co­nomic­growth–do­mes­tic sales and or­ders re­mained static in the third quar­ter, as did the sec­tor’s em­ploy­ment ex­pec­ta­tions, in­vest­ment in train­ing, and con­fi­dence in prof­itabil­ity and turnover. Al­most all ser­vices in­di­ca­tors re­main be­low their pre-eu ref­er­en­dum lev­els.

Adam Marshall, di­rec­tor gen­eral of the BCC, said: “The unin­spir­ing re­sults we see in our third quar­ter find­ings re­flect the fact that po­lit­i­cal un­cer­tainty, cur­rency fluc­tu­a­tions and the va­garies of the Brexit process are con­tin­u­ing to weigh on busi­ness growth prospects.

“The Chan­cel­lor’s au­tumn Bud­get is a crit­i­cal op­por­tu­nity to demon­strate that the govern­ment stands ready to in­cen­tivise in­vest­ment and sup­port growth here at home. A fail­ure to act, or a con­scious choice to pro­vide a short-term sugar hit to the elec­torate rather than the pro­tein boost the econ­omy needs, would have sig­nif­i­cant con­se­quences for theuk’smedium-ter­mgrowth prospects. While much of West­min­ster and White­hall is dis­tracted by Brexit, busi­ness needs ac­tion now on the home front.”

Suren Thiru, head of eco­nomics at the BCC, added: “The man­u­fac­tur­ing sec­tor saw a wel­come im­prove­ment across a num­ber of in­di­ca­tors, boosted in part by stronger growth in key ex­port mar­kets. How­ever, the rel­a­tive size of the sec­tor means that its con­tri­bu­tion to UK GDP growth is likely to have re­mained lim­ited this quar­ter.

“The ser­vices sec­tor re­mains un­der pres­sure, and with most in­di­ca­tors broadly static in the quar­ter, the sec­tor has yet to re­cover from the loss of mo­men­tum suf­fered in the wake of the EU ref­er­en­dum.”

Mean­while, a study yes­ter­day com­mis­sioned by En­ter­prise Na­tion and Ama­zon sug­gests that Scot­tish SMES are con­cerned about the out­look for the UK econ­omy over the next 12 months.

The Cap­i­tal Eco­nomics SME Growth Tracker’s main con­fi­dence in­dex de­clined to -8, from -3 a year ear­lier. How­ever, SMES are con­fi­dent about their own prospects.

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