Britain’s government needs to speed up its decision-making on big infrastructure projects to help the country’s economy withstand a slowdown caused by the Brexit vote, a leading employers’ group said yesterday.
The British Chamber of Commerce cut its forecasts for economic growth in 2016 to 1.8 per cent from a previous estimate of 2.2 per cent and it also downgraded its 2017 and 2018 growth forecasts to one per cent and 1.8 per cent respectively.
“They [the government] should start with the long list of business-boosting infrastructure projects that have been put on hold for far too long – including a firm decision on a new airport runway, new nuclear investment and road and rail schemes,” BCC acting director general Adam Marshall said.
Finance minister Philip Hammond said last week that big infrastructure projects would take too long to deliver an economic impact to feature in budget plans he will announce in November but he said he could fund more modest projects if needed.
The prospect of a recession caused by Britain’s decision to leave the EU has receded after a rebound in economic data for August, including a pick-up in consumer confidence. But there are signs from companies of longer-term drags on the economy.
The BCC said it expected business investment to fall by 2.2 per cent in 2016 and by 3.4 per cent in 2017, a sharp turnaround from its previous forecasts for rises of 4.5 per cent and 7.4 per cent respectively.
A separate analysis by accountancy firm BDO also called for more infrastructure investment, and said businesses were starting to regain their confidence after a dip following the EU referendum.
The BDO Optimism Index rebounded to 98.7 in August from a three-year low of 97.9 in July. The index, calculated using business and central bank survey data, indicates recessionary conditions at 95 and two per cent long-term growth at 100. Separately on Monday, credit card firm Visa said its UK Consumer Spending Index suggested overall consumer spending growth rose by just 0.1 per cent in August compared with July, its slowest increase in almost three years.
The index jumped by 1.6 per cent in July when official data also showed consumers spent heavily despite the Brexit vote. Official data for retail sales in August are due on Thursday.