As the wave of Brexit turmoil is continuing to hit the financial markets all over the globe, the British Chambers of Commerce decided to diminish its UK growth forecast from 2.2% to 1.8% this year. Will the UK avoid the recession?
12 September, AtoZForex – EU referendum consequences continue to hit the political and financial world. A state body of 52 qualified chambers of commerce across the UK, the British Chambers of Commerce (BCC) cut its growth outlook for the UK in the wake of Brexit.
British Chambers of Commerce cuts UK growth forecast
Currently, BCC is expecting to witness the UK growth at 1.8% this year, down from its March expectations of 2.2%. The 1% slide is also anticipated in 2017 BCC outlook from its initial forecast of 2.3%. The turmoil around Article 50 implementation would “dampen growth prospects,” where consumer spending would weaken, as it is reported by BCC. It stated that the UK “would skirt with”, but stay away from crisis.
Nevertheless, the consultancy and services group BDO believes that the optimism is growing across the UK compared to three-year low last month figures. This BCC outlook is its first since the EU referendum and it highlighted that when it did not anticipate a slump, firms were still adapting to the Brexit voting results. Dr. Adam Marshall, the director general at BCC, stated:
“Although individual businesses continue to report strong trading conditions, the overall picture suggests a sharp slowdown in UK growth lies ahead.”
He also called for the government to determine “a clear timetable” for the Article 50 negotiations with Eurozone, saying it would ultimately boost the business spending.
The UK index of business optimism rose
The Markit/CIPS purchasing managers’ index (PMI) data earlier this month indicated a growth from 47.4 in July to 52.9 in August. Experts believe that the firm growth tendency meant the crisis avoidance for the UK, as it showed the services sector figures went back to pre-Brexit levels.
Additionally, the UK index of business optimism rose from 97.9 to 98.7. The index of business optimism by BDO estimates the growth in upcoming six months. Peter Hemington from BDO has stated:
“After the immediate Brexit scare, businesses are becoming more confident as they start to find that, for most of us, it’s back to business as usual. But ongoing uncertainty and the likely longer-term damage if we exit the single market, are concerns which continue to justify government support for growth.”
He believes that the government should use the advantage of “cheap borrowing costs to invest in infrastructure and protect the growth of our economy as we move closer to exit negotiations.”
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