The British Chamber of Commerce (BCC) on Monday released its latest economic forecast, downgrading growth expectations for the UK in 2019 to 1.2% (from 1.3%) and to 0.8% (from 1.0%) for 2020.
The leading group cited Brexit stalemate and the resulting drop in business investments and productivity as reasons for downgrading growth forecasts.
key points (source: britishchambers.org.uk)
Business investment is now forecast to decline by 1.5% this year and by 0.1% in 2020, which together with the decline of 0.4% in 2018, would be the longest period of sustained full-year declines in business investment for 17 years.
The UK’s net trade position is forecast to weaken over the period as companies face the combined headwinds of relentless uncertainty on the UK’s future relationship with Europe, weakening growth in key international markets and mounting global trade tensions.
The BCC’s economic forecast assumes a messy and disorderly Brexit is avoided. A no-deal exit would lead to major, sudden and unanticipated changes for the UK economy and would lead to revisions in our next forecast.
UK GDP growth forecast for 2019 is downgraded from 1.3% to 1.2%and from1.0% to 0.8% in 2020 and remains unchanged at 1.2% in 2021.
The quarter-on-quarter GDP growth is forecast to pick-up to 0.3% in Q3 2019, up from the 0.2% contraction in Q2.
UK official interest rates are expected to remain at 0.75% throughout 2019 and 2020, before rising to 1.0% in 2021, a year later than in our previous forecast.
GDP growth forecast of 1.2% remains unchanged for 2021.