UK economy set for slowest growth since 2009 and business investment to decline, BCC warns

UK economic growth could slow to its lowest level since 2009 over the next two years as business investment and the pound are hit by Brexit uncertainty, according to the British Chambers of Commerce.

The group expected business investment to contract by 0.6 per cent in 2018 before growing 0.1 per cent next year.

The outlook was based on the assumption the reaches an agreement with the EU over Brexit, avoiding a “cliff edge” in the short term but with longer term uncertainty.

The business lobby raised its GDP growth forecast for 2018 to 1.2 per cent and maintained its forecast at 1.3 per cent for 2019 but downgraded its 2020 forecast to 1.5 per cent, from 1.6 per cent.

A continued slide in the pound and weaker consumer confidence would stifle the contribution of trade and consumer spending, it predicted.

The forecasts would bring about the weakest two years of growth since 2009.

BCC director general Dr Adam Marshall said: “While Brexit isn’t the only factor affecting businesses and trade, it is hugely important – and the lack of certainty over the UK’s future relationship with the EU has led to many firms hitting the pause button on their growth plans.”

Head of economics at the BCC Suren Thiru said: “The subdued growth outlook for the UK economy reflects our view that the weakness in sterling is likely to persist for some time and together with Brexit uncertainty is likely to drag on key drivers of UK economic growth – notably business investment, consumer spending and trade.”