While the UK’s GDP grew by 0.4% in the second quarter of the year thanks to the favourable weather and the World Cup, the Institute expects the economy to grow at a sluggish 1.3% for the year.
Growth is then expected to pick up slightly in 2019 at 1.5% thanks to easing inflation and gradual growth in business investment.
Michael Izza, ICAEW chief executive said, “Brexit has been restricting business growth since the referendum in 2016, and with the potential of a no-deal exit, businesses don’t expect any comforting news in the immediate future. It is likely that these unpredictable factors will result in business investment growth remaining modest for the foreseeable future.”
However, Izza said, “It is not all bad news”, that the economic and financial conditions for investment remain good and rates of return on investment remain “very strong” relative to recent years.
“Once negotiations come to a climax, whether it is a deal or no-deal Brexit, businesses will have more clarity on what to expect for the future,” he added.
According to its business confidence monitor released last month, companies are expected to become more cautious about business investment in the coming months, especially in terms of capital, research & development and staff development.
The index, which measures how senior executives view the economic prospects facing their businesses over the next 12 months compared to the previous year, fell into negative territory after three quarterly increases due to the “fragility and lack of certainty” for businesses around the UK.