On Monday, the British Chambers of Commerce slashed its outlook for economic growth for 2019 and 2020, citing a waning global economy, U.S.-Sino trade disputes and Brexit uncertainty.
The British Chambers of Commerce (BCC) cut back its economic growth forecast for this year to 1.2% from 1.3% in June, also lowering the figure for 2020 to 0.8% from 1.0%. Members of the BCC employ roughly one in five British workers.
The new forecast by the BCC is far below the average 1.1% outlook projected for 2020 by economists in a Reuters poll. It would signal the slowest growth since the 2008-09 global recession.
The participants said their outlook was founded on the assumption that Britain will evade a no-deal Brexit, which could harm the UK.
“Our latest forecast shows a number of warning lights are flashing for the UK economy, even if we are able to avoid a messy and disorderly exit from the EU in just a few weeks’ time,” said BCC director general, Adam Marshall.
British Prime Minister Boris Johnson has vowed to lead the UK out of the European Union on October 31, with or without a deal in place, but parliament has instructed him to postpone Brexit once again, if a transition agreement with the bloc cannot be reached by next month.
Global growth is also seen declining, widely due to a prolonged trade war between China and the United States, which has left negative effects on exporting countries such as Germany.
During the April-June quarter, Britain’s economy tumbled by 0.2%, mainly attributed to the aftermath of the preparations for the former March 29 Brexit deadline, but the BCC expects a rebound to 0.3% growth in the current quarter.
Brexit uncertainty has weighed heavily on business investment – which was steering towards its longest period of full-year declines in 17 years – as well as gains in productivity, hindering future growth in living standards, said BCC economist Suren Thiru.
The BCC expected wage growth to average just under 3% over the next couple of years, while inflation was seen standing at just above 2%, with interest rates from the Bank of England not increasing until 2021.
According to a survey conducted by the Institute of Directors, another employers’ group, revealed almost 30% of member firms had or were taking into consideration the option of establishing operations outside of the UK due to Brexit.
In contrast, only 9% were considering moving operations back to the UK, the survey showed.
The survey also revealed 51% of firms said a no-deal Brexit would be the worst possible scenario, while 32% believe that a delay to the current Brexit date could have even worse repercussions.
IoD’s head of trade policy, Allie Renison said: “The idea of leaving the EU without a deal in place is certainly the bigger concern, but the prospect of repeated delays with no clear path forward is far from an appetizing prospect.”
The IoD poll of 952 companies was conducted between July 1 and 17.
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