British firms slash investment by most in a decade as Brexit uncertainty continues, BCC says

UK companies plan to cut investment in favour of stockpiling resources as Brexit drags on, according to a recent survey by the British Chamber of Commerce.

British businesses look to cut investment by the most in 10 years in 2019 as Brexit uncertainty continues, threatening UK economic growth in the process, a recent survey by the British Chamber of Commerce (BCC) said.

The continued Brexit impasse, including the growing possibility of a no-deal exit, together with the high upfront cost of doing business in the UK and the running down of excess stock, is expected to suffocate investment activity over the near term.

Forecasts for business investment growth were downgraded to -1.3% for 2019, from -1.0% and to 0.4% for 2020, down from 0.6%, the survey said.

Meanwhile, UK GDP growth in 2019 was upgraded from 1.2% to 1.3% and downgraded from 1.3% to 1% in 2020. However, the BCC said that its forecasts assume that the UK avoids a disorderly Brexit.

BCC urges next PM to break Brexit deadlock

The BCC’s latest forecast is a clear warning sign that the next Prime Minister must set out a clear roadmap for how the political impasse in Westminster can be broken and an agreement reached to prevent further slowdown in the economy.

‘The downward pressure on business activity and investment intentions from the unwinding of stocks is likely to be exacerbated somewhat by increasing cost pressures and Brexit uncertainty, slowing overall economic growth across the forecast period,’ Head of Economics at the BCC Suren Thiru said.

‘A messy and disorderly exit from the EU remains the main downside risk to the UK’s economic outlook as the disruption caused would increase the likelihood of the UK’s weak growth trajectory translating into a more pronounced deterioration in economic conditions,’ he added.

British firms stockpile resources ahead of Brexit

As the probability of a no-deal Brexit continues to increase, British businesses begun formulating contingency plans that include stockpiling of resources rather than investing in new ventures that could help fuel economic growth.

‘The UK’s low-growth trajectory makes clear that we can’t afford for Westminster to keep turning a blind eye to the domestic agenda,’ Director General of the BCC Adam Marshall said.

Businesses will be expecting the government to take action in the upcoming Comprehensive Spending Review to alleviate the heavy burden of upfront costs, which stunt growth, Marshall added.


This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.

See an opportunity to trade?

Go long or short on more than 17,000 markets with IG.

Trade CFDs on our award-winning platform, with low spreads on indices, shares, commodities and more.

Live prices on most popular markets

  • Forex
  • Shares
  • Indices
Sell
Buy
Updated
Change
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Sell
Buy
Updated
Change
Sell
Buy
Updated
Change
-
-
-
-
-
-
-
-
-
-
-
-
China 300
-
-
-
-

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.