Britain’s economy will grind to a near standstill over the coming months as post-referendum uncertainty triggers a slump in business investment, a leading business group has warned as it slashed its growth forecasts.
In its first set of forecasts since the vote to leave the EU, the British Chambers of Commerce (BCC) on Monday more than halved its GDP growth prediction for next year from 2.3% to 1.0%. That would mark the worst economic performance since 2009, when the UK was emerging from a deep recession sparked by the global financial crisis.
Recent economic indicators suggest activity has rebounded from an initial post-referendum dive but the BCC’s gloomy outlook shows that businesses remain nervous about the prospect of protracted negotiations to leave the EU and about potential trade deals.
The confidence of the business community was dealt another blow over the weekend as it emerged Liam Fox, the international trade secretary, had launched an extraordinary attack on British executives, suggesting they would rather play golf than export their goods and services.
Asked about Fox’s description of a Britain that had grown “too lazy and too fat” on earlier successes, BCC president Francis Martin called for politicians to support businesses as the country works out its EU exit.
“Business and government need to work together if we’re to make a success of the transition ahead,” said Martin. “Business people don’t mind a robust conversation, but they will insist on a constructive one.”
The business group’s new forecasts put it broadly in line with the Bank of England, which also sees a sharp slowdown in GDP growth next year to just 0.8% from 2% this year.
The Bank has already cut interest rates to a record low of 0.25% and expanded its programme to pump electronic cash into the economy. It is widely expected to cut base rates again, to 0.1%, before the end of the year. But no move is anticipated when its policymakers meet this week, according to a Reuters poll of economists.