British industry enjoyed solid growth in November, benefiting from a global upturn that has allowed the economy to outperform gloomy forecasts made after the Brexit vote, although the economy still faces an “underwhelming” 2018.
The British economy grew more slowly than all other Group of Seven members in the first nine months of 2017 as consumer-facing sectors suffered from a surge in inflation caused by sterling’s Brexit vote. With its departure from the EU set for March 2019, few economists think growth will improve this year. But the latest official data signalled that industry remains a bright spot: Manufacturers recorded their fastest annual growth since March 2011 in the three months to the end of November, expanding by 3.9% from a year earlier. However, the British Chambers of Commerce (BCC) said its latest quarterly survey showed the UK economy was set for an underwhelming 2018 because of Brexit.
Companies are grappling with UK cost pressures and were reluctant to invest more, the survey showed.
The services sector, which represents the lion’s share of Britain’s economy, continued to expand at a subdued pace, the chambers said, while manufacturers did better than services firms, but still reported a slowdown in both domestic and export sales. Overall the survey suggested the UK economy grew modestly at the end of last year. “The economy is set to continue on an underwhelming growth trajectory,” BCC’s head of economics, Suren Thiru, said.
Meanwhile, supermarket group Sainsbury’s cautioned that the UK market for general merchandise and clothing would be tough in 2018, taking the shine off a slight upgrade to its forecast for annual profit. Sainsbury‘s, which extended its product range when it bought toys and electricals retailer Argos for £1.1 billion (€1.24bn) in 2016, indicated that trend would continue this year.
Earlier this week, Britain’s fourth-ranked supermarket chain Morrisons beat Christmas sales growth forecasts while industry data indicated market leader Tesco outperformed its listed rivals during the festive quarter. Tesco will update later today. Discounter Lidl said its UK sales grew 16% in the Christmas period.