British economic growth this year and in 2019 looks set to be the weakest since the country’s last recession, due to a freeze in business investment and weak consumer demand ahead of Brexit, the British Chambers of Commerce forecast on Tuesday.
The business lobby said growth in 2018 was likely to slow to 1.2% before inching up to 1.3% in 2019, which would be the two weakest years since Britain emerged from recession in 2009 after the global financial crisis.
“While Brexit isn’t the only factor affecting businesses and trade, it is hugely important, and the lack of certainty over the UK’s future relationship with the EU has led to many firms hitting the pause button on their growth plans,” BCC director Adam Marshall said.
Britain’s economy has slowed since the Brexit referendum in 2016 and there is no guarantee that businesses and consumers will retain tariff-free access to European goods when Britain leaves the European Union which is scheduled for March 29.
The BCC said sterling’s weakness against the dollar and the Euro was likely to continue to drive inflation, eating into consumers’ disposable income, while business investment was due to contract by 0.6% this year and barely grow the next.
Separately, the Royal Institution of Chartered Surveyors predicted that house prices would be flat next year, the first year with no growth since 2012, due to Brexit uncertainty and the inability of many buyers to afford higher prices.
“On the back of this, house price growth at a UK level seems set to lose further momentum, although the lack of supply and a still solid labour market backdrop will likely prevent negative trends,” RICS’s head of policy, Hew Edgar, said.
The number of houses being sold was likely to fall around 5% next year, RICS added.