UK economic growth ‘muted’
The influential group surveyed over 7,100 businesses. It found the proportion of manufacturing companies reporting improved domestic sales rose to its highest level since the first quarter of 2015. It also showed that export sales and orders improved, as stronger recent economic growth in a number of key markets has helped support demand for UK products.
The services sector, which is a far greater part of the UK economy, saw domestic sales and orders remain static over the period. In particular, those businesses that depend on the consumer have reported weaker growth rates.
Dr Adam Marshall, director general of the BCC, said: “The uninspiring results we see in our third quarter findings reflect the fact that political uncertainty, currency fluctuations and the vagaries of the Brexit process are continuing to weigh on business growth prospects.
“The Chancellor’s Autumn Budget is a critical opportunity to demonstrate that the government stands ready to incentivise investment and support growth here at home. A failure to act, or a conscious choice to provide a short-term sugar hit to the electorate rather than the protein boost the economy needs, would have significant consequences for the UK’s medium-term growth prospects.”
Dr Marshall said that Westminster and Whitehall were ‘distracted by Brexit’ and business needed action on the home front. He cited high up-front costs, a lack of incentive to invest, and weak infrastructure as key problems for business.
Suren Thiru, head of economics at the BCC, said it was ‘extraordinary’ that the Bank of England was considering a rate rise in this environment: “With UK economic conditions softening and continued uncertainty over Brexit, it is vital that the MPC provides monetary stability. We’d caution against an earlier than required tightening in monetary policy, which could hit both business and consumer confidence and weaken overall UK growth. While interest rates need to rise at some point, it should be done slowly and timed to not harm the UK’s growth prospects.”