Chambers of Commerce cuts growth expectations

● Business group also calls for action to grow investment at autumn Budget

0 Director-general Adam Marshall – the UK economy as a whole is likely to grow at a ‘snail’s pace’ The British Chambers of Commerce (BCC) has today cut its growth forecasts for the UK economy and warned that the upcoming autumn Budget cannot be a “business as usual” affair.

The membership and lobby group said it was now forecasting GDP growth for 2018 at just 1.1 per cent, down from a previous forecast of 1.3 per cent. It has also trimmed its forecast for 2019 from 1.4 per cent to 1.3 per cent.

The organisation’s latest forecast implies that by 2020 the UK economy will have experienced its second weakest decade of average annual GDP growth on record.

Today’s downgrades have been largely driven by a weaker outlook for trade and investment, the BCC noted. Exporters face more subdued growth given continued Brexit uncertainty and the expected slower growth in key markets.

As a consequence, the BCC added, net trade is expected to make a negative contribution to GDP over the forecast period.

On a brighter note, the UK labour market is expected to continue to be a “source of strength” for the economy, with the unemployment rate forecasted to remain close to its record low. However, firms are likely to face “significant” skills gaps, undermining their potential to grow, according to the business group.

Alongside the forecast, the BCC warns that the autumn Budget must see ministers go “all-out” to incentivise and kickstart business investment at a “crucial turning point” for the economy.

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.”

Suren Thiru, head of economics at the BCC, added: “Consumer spending is unlikely to offset the predicted weakness in investment and trade with real wage growth expected to remain muted across the forecast horizon.”

“Consumer spending is unlikely to offset the predicted weakness in investment and trade”