CBI: Brexit agree­ment nec­es­sary to un­lock UK in­vest­ment and growth

The National - News - - BUSINESS -

Leav­ing the Euro­pean Union with an “am­bi­tious deal” on trade will help to un­lock UK in­vest­ment and lead to a grad­ual im­prove­ment in growth, the Con­fed­er­a­tion of Bri­tish In­dus­try said yes­ter­day.

Ac­com­pa­ny­ing their lat­est eco­nomic fore­casts, the CBI’s view could boost Prime Min­is­ter Boris Johnson’s elec­tion cam­paign, which has fo­cused on the need to “get Brexit done”.

That is de­spite the next stage of Bri­tain’s de­par­ture from the EU set to be even more tor­tur­ous than the cur­rent one, ac­cord­ing to trade ex­perts.

The prime min­is­ter is cam­paign­ing on a pledge to leave the EU early next year and sign a trade agree­ment be­fore a tran­si­tion pe­riod ex­pires at the end of 2020 – a timetable that may be overly am­bi­tious. It will be cru­cial that the next govern­ment is clear it will take the time nec­es­sary to get a deal done, the CBI’s chief economist Rain New­ton-Smith said.

“This is go­ing to be a process. It isn’t like you’re go­ing to have this wall of in­vest­ment that is sud­denly un­leashed,” Ms New­ton-Smith said. Nev­er­the­less, “if firms can see a close deal with the EU on the hori­zon, with no fur­ther Brexit cliff-edges to worry about, in­vest­ment will be un­locked”, she said.

In its lat­est out­look, the busi­ness group fore­cast a “mod­est” growth rate of 1.3 per cent this year and 1.2 per cent in 2020, be­fore a pick-up to 1.8 per cent in 2021 as global chal­lenges and Brexit un­cer­tainty wane.

The fore­casts are based on leav­ing the EU with a tran­si­tion agree­ment on Jan­uary 31, with a “clear line of sight to an am­bi­tious deal for all sec­tors that de­liv­ers tar­iff-free trade and close align­ment on rules”. The CBI said mo­men­tum in the econ­omy is sub­dued, and noted its fore­cast is sub­ject to a high de­gree of un­cer­tainty. Un­der a sce­nario of fur­ther Brexit tur­moil, the group an­tic­i­pates growth of 1 per cent and 1.6 per cent in 2020 and 2021 re­spec­tively.

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