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BCC: Contraction in business investment to drag UK growth in 2020 and 2021

The British Chambers of Commerce revised up 2019 UK growth forecast to 1.3% (from 1.2%), driven by the “exceptionally rapid stock-building” early in the year. However, 2020 growth forecast was downgraded notably to 1.0% (from 1.3%), 2021 downgraded to 1.2% (from 1.4%). In particular, business investment is forecast to contract -1.3% in 2019 before recovering slightly by 0.4% 2020.

Adam Marshall, Director General of BCC noted: “Businesses are putting resources into contingency plans, such as stockpiling, rather than investing in ventures that would positively contribute to long-term economic growth. This is simply not sustainable”,

Suren Thiru, Head of Economics at BCC said: “The deteriorating outlook for business investment is a key concern as it limits the UK’s productivity potential and long-term growth prospects…. A messy and disorderly exit from the EU remains the main downside risk to the UK’s economic outlook as the disruption caused would increase the likelihood of the UK’s weak growth trajectory translating into a more pronounced deterioration in economic conditions.”

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