British businesses reported their weakest growth in nearly six years during the past three months due to fears of a no-deal Brexit and rising global trade barriers, the Confederation of British Industry said yesterday.
The confederation’s index of UK private-sector activity over the past three months dropped to -3 in February from zero in January.
This was its lowest since April 2013, when the UK was still recovering from the global financial crisis. Firms expected similar weakness in the three months ahead, when the UK is due to leave the EU after over 40 years of membership.
Prime minister Theresa May has yet to win the UK parliament’s support for a Brexit transition deal although she has paved the way for a possible delay to Brexit beyond its scheduled date of March 29.
“More and more companies are hitting the brakes on investment and day-to-day business decisions are becoming increasingly problematic,” said the confederation’s chief economist Rain Newton-Smith.
A survey last week showed manufacturers stockpiled goods by the most on record for any big advanced economy as they prepared for the possibility of border delays after Brexit.
The Bank of England has predicted that the UK’s economy will expand just 0.2% in the three months to March and growth in 2019 to be the weakest since 2009, even if Brexit goes smoothly.
The UK’s trading partners in Europe are facing weaker growth too, due to trade tensions between the US and China that have hurt global manufacturers. The survey was based on responses from 650 businesses in retail, manufacturing and services.
On Friday, a survey showed British factories slashed jobs in February and braced for Brexit by stockpiling goods at the fastest pace seen in any Group of Seven country since records started in the early 1990s.
About 70% of factories cited Brexit as the reason behind the record drive to build up stocks of parts and materials. The UK economy slowed sharply in late 2018, hit by a loss of momentum in the global economy and Brexit concerns. Economists say the weakness has continued in 2019.