Monday 18 March 2019 12:01 am | Updated: Monday 03 June 2019 12:18 am

Investment to hit lowest rate since financial crisis, UK business body warns

Business investment in the UK will decline by one per cent in 2019 amid further Brexit uncertainty, making it the worst year since the financial crisis, the British Chamber of Commerce (BCC) has today predicted.

Economic growth in 2019 will be just 1.2 per cent, the BCC, the national body of 53 chambers of commerce, also predicted after conducting an analysis of the economy. This would be the lowest figure in a decade.

Growth in the dominant services sector is expected to slow to 1.1 per cent in 2019, which would be its worst score since 2009, according to the BCC, which represents tens of thousands of businesses across the country. Growth in manufacturing was forecast to be 0.5 per cent in 2019, and 0.7 per cent for the construction sector.

The organisation pointed to Brexit, particularly “the diversion of resources to prepare for no deal”, as well as “critical skills gaps” and “ageing physical and digital infrastructure systems” as reasons for low investment and growth.

It also predicted that despite average earnings growth being set to increase in 2019, household spending will likely be limited by weak consumer confidence and high debt levels, weighing on the country’s economic performance.

These predictions assumed that Britain will leave the EU with a deal. Head of economics at the BCC Suren Thiru said: “A messy and disorderly exit from the EU would materially increase the probability of the UK slipping into recession, particularly if global economic conditions continue to soften.”

Even with a deal, “the significant costs, diversion of resources and loss of business that many firms have had to incur to protect themselves against a possibility of no-deal Brexit and the lack of clarity over the UK’s future relationship with the EU is likely to limit the expected improvement in economic output as Brexit uncertainty eases”, Thiru said.

Director general of the BCC Adam Marshall said: “For too long Brexit has distracted from efforts to remove barriers to growth at home.”

“A clear course of action on Brexit is needed from government, and greater levels of planning and guidance to prepare its own agencies and communities for all possible outcomes”, he added.