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10 Oct 2016 12:30pm

UK service sector slows following Brexit vote, says BCC

Growth in the UK’s service sector has slowed since the EU referendum but manufacturing sales have improved, a survey of more than 7,000 businesses has found

The British Chambers of Commerce (BCC) said the balance of firms within the service sector reporting improved domestic and export sales was at the lowest level in four years during the third quarter of the year.

The quarterly economic survey, its first covering the period after the EU vote, found that performance in the manufacturing sector improved, with the balance of domestic sales rising to 13 points.

The balance of manufacturers hiring more staff also rose to 15 from 12, while in the services sector the number fell to 14 from 19 points last quarter.

Hiring expectations in both the manufacturing and service sectors fell during the third quarter. The balance fell 13 points to 15 for firms within the service sector.

The BCC downgraded the UK’s economy forecast for next year to 1% from 2.3%, led by lower expectations for hiring, turnover, and investment in plant, machinery, and training after the Leave vote.

Adam Marshall, BCC’s acting director general, said, “While many manufacturers have seen something of a bounce this summer, the UK's services sector has slowed significantly, and our data suggests that slower growth is likely in the months ahead.”

According to the survey, firms in both sectors reported that the exchange rate is a greater concern to their business than three months ago, with 30% of services businesses (up from 15%) and 48% of manufacturers (up from 35%).

As a result, Marshall urged the government to give “the green light to key infrastructure projects” and to introduce measures to boost business investment and job creation.

He said, “The chancellor's Autumn Statement is a crucial opportunity to incentivise business investment and overseas trade. Final and irrevocable decisions on infrastructure projects, both big and small, would also boost business confidence and support investment all across the UK."

Jessica Fino

 

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