Raymond Doherty 16 Sep 2019 04:39pm

UK GDP forecast down as no-deal threat increases

The British Chambers of Commerce (BCC) has dropped its UK GDP growth forecast for 2019 from 1.3% to 1.2%

A further cut from 1.0% to 0.8% in 2020 is now predicted but 2021 remains unchanged at 1.2% in 2021, said the business group.

It follows a similar downgraded economic outlook from ICAEW, which last week reduced its GDP predictions from 1.5% to 1.1%, against a background of continuing Brexit uncertainty, falling business investment and declining output.

“Our latest forecast shows a number of warning lights are flashing for the UK economy, even if we are able to avoid a messy and disorderly exit from the EU in just a few weeks’ time,” said Adam Marshall, director general of the BCC.

“There’s no dancing round the fact that Brexit uncertainty has hit business investment hard. In addition to reaching a negotiated settlement with the EU, the government should be preparing big new incentives for business investment in the UK, and should reconfirm its unconditional backing for the big infrastructure projects our economy needs to unlock growth", he added.

Also today, the Institute of Directors (IoD) has called on the UK and EU to compromise to chart a way forward on Brexit. It says businesses are facing an “impossible situation”.

Prime minister Boris Johnson and his government have been steadfast in their willingness to attempt to push through no-deal Brexit on October 31st if no agreement is struck, despite a a bill passed in Parliament last week that aims to stop it.

The IoD’s survey found that a slim majority would prefer a further extension of Article 50 over a no-deal Brexit, but that both options raised concerns among business leaders. Most would prefer a deal was agreed.

“Firms are facing an impossible situation as they try to prepare in advance for the possibility of simultaneous sweeping changes on an unprecedented level. The idea of leaving the EU without a deal in place is certainly the bigger concern, but the prospect of repeated delays with no clear path forward is far from an appetizing prospect for enterprise,” said Allie Renison, head of Europe and Trade Policy at the IoD.

Nearly a third of IoD members have started “engaging” with relocation as part of their Brexit contingency planning, with 14% indicating they had already moved operations or were in the process of doing so.