BCC forecast: Business investment and productivity sinking amid Brexit stalemate and global slowdown
The British Chambers of Commerce has today (Monday) released its latest economic forecast, downgrading growth expectations for the UK in 2019 to 1.2% (from 1.3%) and to 0.8% (from 1.0%) for 2020. Our GDP growth forecast of 1.2% remains unchanged for 2021.
While the leading business group expects that the UK economy will avoid a technical recession and return to modest growth in the third quarter, downgrades to its GDP growth forecast for 2019 and 2020 reflect a weaker outlook for investment, trade and productivity amid a continued lack of clarity over the outcome of Brexit and deteriorating global economic conditions.
Business investment is now forecast to decline by 1.5% this year and by 0.1% in 2020, which together with the decline of 0.4% in 2018, would be the longest period of sustained full-year declines in business investment for 17 years. Relentless Brexit uncertainty and the diversion of resources by many businesses to guard against the chaos of a messy and disorderly Brexit, are expected to limit investment intentions over the forecast period.
UK productivity is projected to be more subdued than in our previous outlook and implies that by the end of 2020, the UK economy will have experienced its weakest decade of average annual productivity growth on record. Anaemic business investment, together with low unemployment, is expected to keep a lid on productivity, with firms expected to rely more on hoarding labour than investing in new technology given the heightened political and economic uncertainty.
The UK’s net trade position is forecast to weaken over the period as companies face the combined headwinds of relentless uncertainty on the UK’s future relationship with Europe, weakening growth in key international markets and mounting global trade tensions.
The BCC’s economic forecast assumes a messy and disorderly Brexit is avoided. A no-deal exit would lead to major, sudden and unanticipated changes for the UK economy and would lead to revisions in our next forecast.
The persistently listless growth forecast reflects the impact of a slowing global economy and increasing trade tensions, but is also a stark reminder of the impact of the political turmoil and lingering unwanted prospect of no-deal exit – the economic consequences of which would be extensive. The BCC is therefore calling on government to do everything in its power to come to a negotiated solution with the EU and to take urgent steps to incentivise investment and boost business confidence.
Commenting on the forecast, Suren Thiru, Head of Economics at the British Chambers of Commerce, said:
“Our latest outlook indicates that the UK economy is set to stumble down an ever more sluggish growth path over the near term, unless decisive action is taken.
“The prolonged nature of the Brexit uncertainty, including the still real risk of a no-deal exit, together with a deterioration in global economic conditions are expected to weigh on investment, trade and productivity – important determinants of economic growth. The deteriorating outlook for productivity is a particular worry as it limits sustained wage growth, living standards and the UK’s longer-term growth potential.
“The continued pressure on business activity and cashflow from historically high stockpiling, loss of business, and costly contingency planning is expected to limit the extent to which economic activity is able to rebound over the near term. Set against this, UK GDP growth will be supported in part by resilient household consumption and stronger government spending. Bold public spending commitments where the overriding objective is stronger growth and productivity can help support the UK economy at a time of significant change.
“The risks to the outlook for the UK economy remained skewed to the downside. A messy and disorderly departure from the EU would palpably increase the likelihood of the UK economy slipping into a marked downturn, particularly given the lack of actionable information that businesses need to help mitigate some of the impacts of a disorderly exit.”
Responding to the forecast, Adam Marshall, Director General of the British Chambers of Commerce, added:
“Our latest forecast shows a number of warning lights are flashing for the UK economy, even if we are able to avoid a messy and disorderly exit from the EU in just a few weeks’ time.
“There’s no dancing round the fact that Brexit uncertainty has hit business investment hard. In addition to reaching a negotiated settlement with the EU, the government should be preparing big new incentives for business investment in the UK, and should reconfirm its unconditional backing for the big infrastructure projects our economy needs to unlock growth.
“Amidst a slowing global economy and continued political uncertainty, the UK government needs to use the autumn Budget to back infrastructure, help businesses train and re-skill more people, and cut the high up-front costs of doing business in the UK.”
Key points in the forecast:
• UK GDP growth forecast for 2019 is downgraded from 1.3% to 1.2% and from 1.0% to 0.8% in 2020 and remains unchanged at 1.2% in 2021
• Quarter-on-quarter GDP growth is forecast to pick-up to 0.3% in Q3 2019, up from the 0.2% contraction in Q2
• Forecast for business investment growth been downgraded to -1.5% for 2019 (from -1.3%) and to -0.1% for 2020 (from +0.4%), before growth of 0.8% in 2021 (downgraded from 1.1%)
• UK official interest rates are expected to remain at 0.75% throughout 2019 and 2020, before rising to 1.0% in 2021, a year later than in our previous forecast
• UK public sector net borrowing is forecast to be £48.2 billion higher over the next three years than predicted by the Office for Budget Responsibility at the 2019 Spring Statement, reflecting marked changes to government spending commitments and weaker expected tax revenue
• BCC expects export growth of 1.3%, 1.3% and 1.5%, compared to import growth of 4.2%, 1.6% and 2.0%, both are weaker compared to our previous forecast
• Labour productivity is expected to grow by just 0.4% in 2019, 0.6% in 2020 lower than our previous forecast of 0.7% and 0.8% respectively. Our forecast for 2021 remains unchanged at 0.8%
• Forecast for growth in household consumption been upgraded to 1.5% for 2019 (from 1.4%), followed by growth of 1.4% in 2020 and 1.5% in 2021
• Average earnings growth is expected to outstrip inflation over the period, with growth of 2.9%, 2.8% and 2.9% respectively, compared with inflation of 2.1%, 2.2% and 2.1%.
Notes to editors:
Please contact the press office for the report, and spokespeople are available for print and broadcast interviews.
The British Chambers of Commerce (BCC) sits at the heart of a powerful network of 53 Accredited Chambers of Commerce across the UK, representing thousands of businesses of all sizes and within all sectors. Our Global Business Network connects exporters with over 50 markets around the world. For more information, visit: www.britishchambers.org.uk
Research published yesterday by the British Chambers of Commerce found that in a survey of over 1,500 companies across the UK – nearly a quarter of firms (24%) say that in the event of a ‘no deal’ exit on 31st October they would revise investment plans down, while just 4% would revise up. 71% of respondents did not state that they would revise investment plans. Larger businesses surveyed (firms with more than 50 employees) were more likely to report that they will revise investment (33%) and recruitment (31%) plans downwards in a ‘no deal’ scenario. 5% of surveyed businesses reported they would revise investment and recruitment upwards, respectively. Additionally, nearly one in five firms surveyed (18%) said they planned to move some or all of their business overseas in a no-deal scenario, signalling the possibility of a significant movement of operations by some firms away from the UK.
This news may be disconcerting for some businesses, but with less than 50 days to go before 31 October our aim is to help you to carry on trading successfully whatever the final outcome.
We’re hosting a number of Brexit workshops across the region to help businesses to learn and upskill their workforces to trade successfully across borders and how to get “Brexit” ready. We’re also hosting a number of training sessions which focus on specific areas of international trade. Click here for our list of workshops and training sessions.
Our dedicated Brexit advice website ‘bresilience.com’ provides companies with information, resources and a detailed checklist to help businesses to understand the issues surrounding international trade after Brexit. It’s also a resource containing the latest news and details on how we can help you plan your international business needs post-Brexit, at both the operational and boardroom levels.
If your business employs EU nationals and you’d like HR advice on how a no-deal Brexit will affect employment contracts you can also contact the Chamber to speak to our Growth Hub HR advisor.
For any other queries on Brexit, please contact the Chamber’s International Trade Team on 01782 202222.
The government has also devised a useful checklist for you to complete to check that your business is Brexit ready. Click here for the checklist.
Companies in North Staffordshire and South Cheshire can now gain access to high level, bespoke commercial advice following the latest appointment at Newcastle-under-Lyme-based Signature Financial Services.
Chris Bailey has been unveiled as Senior Commercial Manager at Signature Financial Services. A familiar face to many company executives across Staffordshire and Cheshire, Chris joins Signature Finance from Lloyds Bank, where he served for 30 years, most recently as a Commercial Relationship Director.
The appointment strengthens Signature Financial Services position as a leader in the commercial finance market, bringing a level of senior advice only available from the big city financial services companies.
It caps a year of growth for Signature Financial Services, which has more than doubled its team from five to 11 and moved to modern, purpose-built office premises at Evolution, Lymedale Business Park.
Managing Director Dean Birks said: “SME companies rarely have easy access to personally delivered, effective relationship management in 2019 and, according to our customers, the service is a major loss.
“Signature Financial Services has moved forward in 2019, generating more wealth for our clients and attracting new customers both on the personal finance and commercial sides of our business and Chris’ appointment represents a further leap forward.
“Chris is recognised in the business arena for his expertise and strategic advice which have helped numerous companies to thrive across our region.
“He will now offer commercial funding and support services for Signature Financial Services of a kind that are generally only available from the bigger finance houses in the major cities.”
Chris, 48, who lives in Newcastle-under-Lyme, said: “Signature Financial Services has a dynamic team and I jumped at the opportunity to come on board. My new role allows me to use the skills I developed whilst at Lloyds to help many local businesses to thrive now giving them access to the whole of the market, and independent financial advice.”
Signature Financial Services traded for several years from the Barracks, close to Newcastle town centre, but a move to purpose-built offices has allowed them to expand their offer and has sparked further growth.
The new office complex is open plan and offers much improved space in which to welcome customers.
For further information on Signature Financial Services, please go online to www.signaturefs.com.
For the third year running, Heathrow and the Department for International Trade’s (DIT) Exporting is GREAT campaign are inviting SMEs across the country to apply for 20 ‘World of Opportunity’ grants worth £2,000 each. The grants will support small businesses that are just beginning to export or help those companies that can export, but don’t.
Applications for this year’s ‘World of Opportunity’ Programme are open until Friday 18th October 2019 and interested parties can apply here – it would be great if you could push this opportunity to your networks and members.
Last year’s winners were made up of specialist tourism operators, software developers and retailers from many of the UK’s regions and nations.
Representatives from DIT will support each winner by helping them access the right information, advice and assistance while connecting businesses to overseas buyers, markets and each other. Plaza Premium will also be providing complimentary lounge passes for the winners as they leave Heathrow on their journeys.
A panel of exporting experts including Lord Deighton, Heathrow’s Chairman and Parveen Thornhill, Head of London & Devolved Administrations from DIT will select this year’s winners.
Last year’s ’World of Opportunity’ Programme received nearly 150 entries from SMEs from Cornwall to Glasgow and the programme is expected to become even more competitive this year. To win one of the prized 20 grants, applicants will need to show why they’re primed to expand their businesses abroad, demonstrate their export capability and give their rationale for the markets they’re targeting.
The grants help to ensure British businesses benefit from the economic opportunities that Heathrow provides as the UK’s only hub airport and most valuable port, with more long-haul routes than any other UK airport and connections to 200 destinations in over 80 countries.
In addition to this programme, for the past 22 years Heathrow has run a successful series of Business Summits around the country. The summits give SMEs the opportunity to engage directly with top tier companies in the airport’s supply chain and discover opportunities to become one of the many businesses that keeps Heathrow running. As part of Staffordshire Business Festival, Heathrow is hosting a Stoke-on-Trent Summit on 7th November at Bet365 Stadium, you can find out more information here.
Finally, once more we will be at all party conferences this Autumn and running an exclusive, airport-style lounge at Labour, Conservatives and SNP. You can register for Lounge access and request to book meeting space for your own meetings at conference here.
Business sites across Staffordshire are continuing to create skilled and better paid jobs as the county maintains near full employment.
Staffordshire County Council’s economic growth leader Mark Winnington said that with sites like i54 South Staffordshire, Redhill in Stafford and Four Ashes fully occupied or nearly fully occupied, he was confident of more opportunities in the future.
At Keele University Science and Innovation and Science Park, its Innovation Centre Number 5, which was part-funded by the county council, is now fully occupied. The latest development – Smart Innovation Hub – is complete with the first tenants set to move in soon. Both centres provide high-value jobs.
Latest statistics issued today show that just 1.9 per cent of the county’s population claim out of work benefits, lower than both regional (3.6 per cent) and national (2.8 per cent) figures.
Mark Winnington added: “Keele University Science and Innovation Park is one of our flagship sites for high-value research and development employment. We have a strong established partnership with the university and supported the construction of both IC5 and the Smart Innovation Hub.
“It is encouraging to see IC5 now fully occupied and the Smart Innovation Hub about to receive its first tenants. This demonstrates our commitment, together with partners, to supporting the creation of better skilled, better paid jobs for Staffordshire people.”
An agreement which builds on an established partnership to grow the economy in South Staffordshire and further strengthen communities is being formed by the county and district councils.
The South Staffordshire Growth Agreement follows on from two successful district deals between the councils over the last six years which set out a range of regeneration projects and initiatives to increase skills and prosperity.
Between 2014 and 2017, 8,000 jobs were created in South Staffordshire, not only within existing businesses but within the additional 350 businesses that are now located within the district. Average weekly earnings for a full-time worker in South Staffordshire increasing by £80 per week over the same period. The earnings of residents of South Staffordshire exceed both the regional and national averages and are the second highest of all the Staffordshire districts.
The new growth agreement will focus on continuing to grow the local economy with further development at sites such as i54 South Staffordshire, ROF Featherstone, Four Ashes and Hilton Cross in addition to developing a three-year education, employment and skills plan. It will also support the delivery of up to 4,000 new homes in the district and initiatives to improve health and wellbeing. The programme will help the Stoke-on-Trent and Staffordshire Local Enterprise Partnership to formulate its local industrial strategy.
Staffordshire County Council leader Philip Atkins said:
“Our strong and successful relationship with South Staffordshire Council has delivered results with national and regional significance in recent years. The near fully occupied i54 South Staffordshire site, and recent progress on a major extension to the business park, are bringing investment, income and higher skilled, better paid jobs to the area in just eight years.
“This new agreement sets out our combined strategy to grow and further develop South Staffordshire’s economy and its communities in a way that benefits everyone. Working together to plan for the future and combine our resources, our two councils will lay the foundations for long term prosperity and a great quality of life for people in South Staffordshire.”
South Staffordshire Council leader Brian Edwards MBE said: “The strength of our partnership working with Staffordshire County Council has helped to deliver major economic benefits to the district in recent years, including 8,000 new jobs since 2014 and average weekly earnings for a full-time worker in South Staffordshire increasing by £80 per week over the same period.
“This plan aims to build on those achievements through continued collaborative working to bring forward further long-term inclusive growth for our communities and businesses, supported by the necessary infrastructure to locally maximise the benefits of growth in South Staffordshire.”
Staffordshire County Council’s cabinet is set to approve the growth plan at its meeting next Wednesday September 18.
Hospice officials have received another welcome cash boost from a company behind a popular British-themed charity quiz.
Phil Wood, managing director of insolvency specialists BCR and Barringtons Chartered Accountants in Newcastle, presented proceeds from the eighth annual event which raised £831 for Douglas Macmillan Hospice.
The quiz, staged at Newcastle Golf Club, attracted teams of local bankers, lawyers and accountants who paid to take part and chipped in generously to a raffle.
It adds to the £20,000 raised by BCR and its sister company Barringtons Chartered Accountants over the years which has helped towards various hospice projects including new mattresses for beds in the Inpatient Unit.
Mr Wood, an accountant in the area for over 40 years, said: “So many local people have their stories to tell about Dougie Mac as it supports patients and their families at a time when they need it most.
“I was inspired to fundraise by the dedicated care of my mother in her final days and am delighted the quiz has become a much-loved fixture on the local business social calendar, attracting a good crowd every year.”
Staff working for the sister companies also combine to hold dress down Fridays, coffee mornings and whip-rounds as well as various fundraisers in their own right to boost hospice funds. Next is a Christmas jumper day.
Donna Adams, Head of Fundraising & Lottery at Dougie Mac, said: “We are incredibly grateful for the generous support of Phil and his team and can only encourage other local businesses to follow in his footsteps.”
Plans are in the pipeline for another BCR charity quiz next spring when supporting the hospice will be the driving force behind a team effort to stage the night.
BCR helps troubled businesses get back on their feet with specialist recovery and restructuring services.
For more information visit www.bcr-insolvency.co.uk and for Barringtons in Nantwich call 01270 623821.
Do you want to make business better in your local area?
Nominations are now open for dynamic, influential and forward thinking business people to join the Chambers’ Council and/or two Local Area Boards (Stafford and Staffordshire Moorlands). Council and Local Area Board Members represent their peers and are advocates for the Chambers and the private sector. They are elected by the Chambers’ membership. Together with the Chambers, they have the power to increase the prosperity of Staffordshire and the local community by forging outstanding connections and lobbying local authorities and the Government for a better business environment.
Council and Local Area Board members are expected to attend up to 6 meetings per year. Meetings usually last for around two hours and aim to discuss a range of business issues affecting Staffordshire. The meetings include a guest speaker on a topic relevant to the local area. This provides a great opportunity to increase local knowledge and to influence the local business landscape.
If you are employed by a business that is a member of Staffordshire Chambers of Commerce you are eligible for nomination. All nominees must be supported by two proposers. The proposer’s business must ideally be from the same locale as the nominee and a Chambers member. For example, if a nominee wishes to be nominated to join the Staffordshire Moorlands Local Area Board, the proposer’s business must also be located in the Staffordshire Moorlands. For more information, please see the proposer’s form:
10 September 2019 – Nominations open
09 October 2019 – Nominations close
14 October 2019 – If an election is needed, voting opens via Staffordshire Chambers’ website
22 October 2019 – Voting closes
24 October 2019 – Scrutiny committee meets to confirm votes
25 October 2019 – Candidates informed
Candidates will be ratified at the following Council and Local Area Board Annual General Meetings:
14 November 2019 – Staffordshire Moorlands Local Area Board AGM
18 November 2019 – Stafford Local Area Board AGM
27 November 2019 – Staffordshire Chambers AGM
From today, Moore Stephens Stoke on Trent Restructuring and Insolvency relaunch our brand to become ‘Moore’. This is part of a wider rebrand of the Moore Stephens global accountancy and
consultancy network, of which Moore Stephens Stoke on Trent is a member. The unveiling of a new logo, visual identity and brand positioning marks the continued evolution of an international network of more than 260 independent firms in 112 countries and a client-focused professional community of more than 30,000 people.
The change from Moore Stephens to Moore encapsulates the traditional core strengths of Moore Stephens, while positioning a more modern brand, supporting the future success of our clients and emphasising our ability to provide global client solutions through our membership and participation in a globally connected accounting and consultancy network.
Speaking on the launch of the new brand, Mustafa Abdulali, Moore Stoke on Trent’s Managing Partner says: “I believe that this brand relaunch positions our firm perfectly for our existing and potential clients.
‘Helping you thrive in a changing world’ is the new brand position, and this is the mindset we bring every day to what we do for our clients, as we help them to succeed today and tomorrow. We build relationships based on trust, quality and clear advice, ensuring those we advise have time to focus on what they do best.”
Moore Global CEO, Anton Colella, captures what the new brand means for clients: “In our changing world, business is increasingly conducted internationally and digitally. Everyone must adapt.
With our new brand – Moore – we choose a new identity fit for a world defined by global decisionmaking, data-driven insight and the need for agility in all that we do. The brand captures our ability to connect to you locally and globally as we help you realise your ambitions. That is why our brand position is ‘Helping you thrive in a changing world.’
We never lose sight of what makes us strong, and why our network has grown and continues to grow – our commitment to ever stronger relationships with our clients.
So as we look to the future, our brand honours our Moore Stephens heritage, reflecting the strengths that clients have, and can always expect from us: straightforward advice, high quality, and the passion we bring every day to our belief that relationships with clients are about much more than simply a job.”
Last month saw 40 Finest and Future Finest members come together to take on the Brampton Factor. This treasure hunt styled event tested the teams’ observational skills, puzzle solving skills and physical skills in the unique “Cell Block Challenge” (which took place in the actual cells!).
It was a perfect summer’s evening as the teams set off around the picturesque Brampton Park, the wooded Station Walks and the historic old police station on Water Street (which is where the cells were).
The treasure hunt was completed as teams then returned to the impressive Summit Hospitality where they put on their thinking caps to try and put the pieces together to solve the final conundrum.
The event was rounded off with a traditional BBQ before the winners were announced. It turned out to be very close with the winning team’s performance in the “Cell Block Challenge” proving to be the deciding factor.
Everyone who attended thought it was a huge success, as can be seen from this selection of the feedback comments:
- I really enjoyed the challenge as I haven’t done anything like that before.
- I thought it was absolutely brilliant.
- It was a really useful informal way of meeting new people to network which was done in a really fun way.
- Attractive location and a great opportunity to get to know people in a ‘different kind’ of situation.
- Created a relaxed atmosphere for everyone to talk from all different businesses.
Rumour has it, due to this event’s success, something like it might be returning again next year…