UK growth forecast downgraded by ICAEW

The Institute of Chartered Accountants in England and Wales (ICAEW) has downgraded its growth forecast for the UK economy as a result of continuing Brexit uncertainty, falling business investment and declining output.

17 Sep 2019

The Institute of Chartered Accountants in England and Wales (ICAEW) has downgraded its growth forecast for the UK economy as a result of continuing Brexit uncertainty, falling business investment and declining output.

In its economic insight for the third quarter of this year, the ICAEW now expects growth of 1.1%, down from 1.5%, with business investment down by 0.5%, continuing the downward trend of the past 18 months.

Meanwhile, output fell by 0.2% during the second quarter, as a result of continuing manufacturing weakness and companies reducing stockpiling activity as March's Brexit deadline came and went.

Commenting on the report, ICAEW Chief Executive, Michael Izza, said: 'After the 2008 recession, business investment recovered, but since 2015 it has stalled and gone into reverse.

'While the overriding priority for the government must be to get a good deal, an investment boom is unlikely even if the UK secures an 'orderly' departure from the EU. A withdrawal agreement would not eliminate uncertainty over the future UK-EU trading relationship, and we know structural issues mean firms are more likely to spend money on labour than capital.'

The ICAEW also suggested that structural and measurement issues – such as the focus on services rather than manufacturing and the blurring of lines between consumer and investment spending – will have a 'dampening effect' on investment.

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