Daily Management Review

Lingering Brexit Concerns leading To Slow UK Growth: Employers’ Association


06/08/2018




Lingering Brexit Concerns leading To Slow UK Growth: Employers’ Association
Brexit will cause the British economy to tread the slow path and there is risk of its shifting a gear down, says the leading employers’ organization of the United Kingdom, the Confederation of British Industry.
 
Compared to a growth rate of 1.8 per cent in 2017, the rate of growth for the current year is expected to be around 1.4 per cent because of heavy snowfall in the operational months of 2018 and uncertainties of Brexit, says the CBI.
 
The organization further expects the GDP growth rate to fall further next year to 1.3 per cent when the UK would be leaving the EU.
 
Concerns have been expressed by business groups with the slow progress in the Brexit talks between eth UK and the EU. additionally, worries have also cropped up because of apparent divisions between senior members of the cabinet. There is a fear that there would be little progress made in Brexit negotiations before the summer recess of the parliament scheduled for next month. 
 
It is necessary for companies to know exactly how they would be able to gain access to the single market of the EU and its customers after Brexit, said Rain Newton-Smith, chief economist at the CBI. Many see the summer recess and an important break because British ministers would need to later on go to Brussels with a clear-cut strategy for the all important negotiations to be held in autumn.
 
“There’s a real danger” no progress would be made before the recess, she said. “The transition deal in March was a huge step forward but a lot of businesses are now saying they still need to know what’s happening after 2020 … We just haven’t had enough clarity on the customs arrangements and access to the single market.”
 
There has been a drop of 0.2 per cent in investments by business in the first quarter of 2018 according to data primarily because of the uncertainties surrounding Brexit and companies refrain from making investment in major projects before they get clarity of the Brexit negotiations’ final outcome.
 
While warning that such an uncertain behavior would continue to hit businesses hard, the CBI did forecast that there would be some growth in business spending in the months in the near future with some big investments to be made in new technologies such as artificial intelligence.
 
“While many companies are turning their attention to AI, automation and streamlining operations to stay competitive, there is only so much that they can do when Brexit uncertainty continues to loom large,” said Alpesh Paleja, principal economist at the CBI.
 
Struggling retailers would he little reason to be cheerful about in the near future believe the CBI because of a hard-hitting slowdown in consumer spending and business investment due to uncertainty of the Brexit negotiations outcome.
 
Weak wage growth and high levels of inflation has forced Britons to cut back on spending. This has been caused by a sudden and sharp drop in the value of the pound soon after the completion of the Brexit referendum.
 
(Source:www.theguardian.com)






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