The United Kingdom is set to face the longest period of slump in business investment in 17 years because of the uncertainty surrounding Brexit and the global economic slowdown because of the protracted trade war between the United States and China, said the British Chambers of Commerce (BCC).

There would be a drop of 1.5 per cent in 2019 in the business spending in the UK and a drop further drop of 0.1 per cent in 2020 because companies are reluctant to go ahead with their investment plans due to the global political turmoil which would put Britain on the course of a weaker economic growth in future.,

The BCC said investment in the UK was due to fall for three years in a row, which would be the longest duration of yearly decline in business investment since the turn of the millennium when so called dotcom bubble burst which impacted investments by companies all across the world.

The time period that will see lower investments in the country is already set to be longer than the slump that was experienced following the 2008 global financial crisis when there was a drop in business investments by a greater degree but for a shorter period – only two years.

Businesses are not willing to make investment in the country because of Brexit uncertainty and are diverting their resources to prepare for a no-deal Brexit scenario, warned the business lobby group. In other circumstances, the funds being kept aside to prepare for a hard Brexit would have been spent on improving economic productivity or in the development of new products in the country.

Meanwhile, a call on the UK and EU to get together and agree to find out a way forward on Brexit was given by the Institute of Directors (IoD). The body also urged the two parties to enhance efforts to avoid a no-deal Brexit. The institute has published survey about the “impossible situation” facing business leaders.

Significant concerns that a no deal Brexit would damage their organizations have been expressed by an overwhelming majority of IoD members. However there was a slightly more considerate view among the respondents, a total of 950 business leaders who were surveyed in the summer, was observed when they were faced with choosing between this and a further article 50 extension. About 51 per cent of the business leaders opined that a no deal would be more negative for their organisation, even though the percentage was significantly higher than the 32 per cent of respondents who were of the opinion that there would be a worse impact if there was a further delay in Brexit.

“We’re seeing the economic costs of the ongoing Brexit stalemate alongside that backdrop of weaker global economic conditions. Businesses have had to switch plans and enact their no-deal planning – that’s going to have a hangover effect into next year. Given the current low growth trajectory, if you had a significant shock for the economy on top of that, that dramatically increases the probability of a recession,” said Suren Thiru, the head of economics at the BCC.

(Adapted from TheGuardian.com)

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