UK firms expect output surge in late 2016 despite Brexit vote: CBI
LONDON – British companies expect a surge in output in the final quarter of the year despite a slowdown in the three months to September, a survey showed, the latest sign that the country’s economy is largely coping with the shock vote to leave the European Union.
The Confederation of British Industry said on Sunday its growth indicator, based on a poll of companies, fell to +3 in the third quarter of 2016, down from +8 in the three months to August and the lowest since March.
The measure showed manufacturing output grew as the fall in the value of sterling after the Brexit vote helped exporters. But retailers and consumer services were broadly flat and business and professional services fell slightly.
By contrast, expectations for the next three months jumped to +22, the highest level since September 2015 with growth expected across all sectors.
“Firms are confident that autumn will bring a surge in activity,” Rain Newton-Smith, the CBI’s chief economist, said.
Britain’s economy appears to have largely defied expectations of an immediate slump after the Brexit vote in June. Official data on Friday showed growth in the run-up to the referendum was higher than expected and the services sector grew strongly in July.
However, the CBI said uncertainty over Britain’s future relationship with the EU continued to depress optimism and investment plans, which would undercut productivity gains and economic growth in the longer term.
Newton-Smith said businesses wanted clarity on the government’s negotiating position in talks with the EU. They also wanted finance minister Philip Hammond to use his first budget statement on Nov. 23 to announce policies to “drive investment and deliver economic growth and prosperity”.
Separately on Sunday, a survey showed small and medium-sized firms were expecting a 1.5 percent acceleration of revenue growth in the year ahead but almost a quarter had put off making business decisions because of the Brexit vote.
However, the Capital Economics SME Growth Tracker, which was commissioned by consultancy Enterprise Nation and Amazon UK, showed 43 percent of SMEs expect the economy will deteriorate over the next 12 months, compared with 24 percent who expect an improvement. -Reuters