Plea to Chancellor as survey shows economy flagging
● Latest British Chambers of Commerce snapshot reveals Brexit-buffeted industry
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.