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Uncertain future for UK economy

By Philip Smith

Concerns over Brexit still high but falling, reports Bank of England

UK business faces an uncertain future, according to two contrasting reports.

A survey from the British Chambers of Commerce (BCC) indicates a degree of pessimism, whereas a Bank of England (BoE) report shows that worries over Brexit are falling.

While 53 per cent of firms say Brexit is still among their top three causes of concern, that is slightly lower compared to the average of the previous three months.

As reported here last month, business confidence in the UK economy has reached its highest level since the EU referendum.

However, a BCC quarterly economic report based on a poll of 6,500 firms in November paints a gloomier picture.

The report says the service sector – which accounts for almost 80 per cent of economic output – worsened in the last quarter.

It also shows that factories’ export and domestic orders were negative for two consecutive quarters for the first time in a decade. Manufacturers’ investment plans also hit an eight-year low.

“The fourth quarter was characterised by a broad-based slowdown in the dominant services sector with all key indicators weakening amid sluggish household expenditure and crippling cost pressures,” said Suren Thiru, BCC head of economics.

“Despite some improvements, indicators in the manufacturing sector remain very weak by historic standards. A faltering service sector together with listless manufacturing activity points to a downbeat outturn for UK GDP growth in the fourth quarter of 2019.”

The BCC is forecasting growth of 0.2 per cent in the final quarter of 2019 and the BoE 0.1 per cent, down from 0.3 per cent in the preceding three months.

FURTHER READING: European factory gloom deepens

FURTHER READING: Confidence in UK economy reaches three year high

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