Private sector growth slows amid ‘lacklustre’ conditions as Brexit uncertainty weighs on firms

Private sector growth slowed in the quarter to November amid “lacklustre” conditions, with activity relatively stable compared to a rise in previous monthly figures.

According to a survey from the Confederation of British Industry (CBI), the balance of firms reporting a rise in output was two per cent in the three months to November, down from a 10 per cent rise in the quarter to October.

The confederation said the slowdown was driven by weaker performances in services and distribution, but added that manufacturing growth picked up slightly.

Private sector activity is projected to remain steady over the next three months to February at around 3 per cent, the CBI said, as growth in manufacturing slows and service volumes fall. This would be partially offset by stronger growth in distribution, it said.

Underlying conditions remained lacklustre, it added, with household spending under pressure from squeezed real earnings and continued uncertainty restraining business investment.

Rain Newton-Smith, CBI Chief Economist, said: “Private sector activity seems relatively stable as we head towards the end of the year. Businesses expect little change over the quarter ahead.

“The various papers which have been published in the last seven days lay bare the potential costs of a no deal Brexit, which would hit jobs and livelihoods across the country.

“While the current deal on offer is not perfect, businesses need the assurance that they won’t face a cliff-edge break with the EU in four months’ time in order to create new jobs and invest further in the UK.”

Last month, bosses at the group were left red-faced after emails accidentally sent to a broadcaster revealed doubts within the organisation over Theresa May's Brexit deal.

The CBI publicly backed the draft deal, praising negotiators on both sides and hailing it as a “much-needed” agreement.

But emails accidentally sent to ITV News exposed differences of opinion among the organisation's leaders when drafting the response, with head of EU negotiations, Nicola Sykes, saying there was “no need to give credit to the negotiators… because it's not a good deal.,” according to ITN.