Economy

UK Firms Anticipate Stagnant Growth in the Coming Three Months: CBI Reports

LONDON (Reuters) – British businesses anticipate that economic growth will slow considerably over the next three months, primarily due to diminished investment and consumer confidence following June’s vote to exit the European Union, according to the Confederation of British Industry (CBI).

The CBI reported that the outlook for economic activity is the weakest since December 2012, with a higher proportion of firms now expecting reduced output compared to those expecting growth. Specifically, the share of businesses predicting lower output has increased by 3 percentage points, reversing the positive outlook seen in June, when there was a 16 percentage point advantage for those anticipating expansion.

"This data indicates a less favorable outlook for the UK’s economic growth," commented CBI Deputy Director-General Josh Hardie. He noted that the survey, conducted between late June and mid-July, likely reflects a downturn for consumer-oriented firms after the referendum.

In the manufacturing sector, while investment intentions have cooled due to uncertainty influencing corporate spending plans, the weaker pound is enhancing the competitiveness of exports.

The CBI’s assessments are informed by its recent dismal surveys of manufacturers’ order books and retailers, complemented by input from other service-based companies that constitute a significant portion of Britain’s private-sector economy.

Additionally, a recent survey by a financial data firm indicated a significant drop in activity, marking the largest decline since the peak of the financial crisis in 2009. Meanwhile, a consumer confidence index reported its steepest fall since 1990.

More comprehensive data is expected to be released later this week, and analysts expect the Bank of England to lower interest rates on Thursday for the first time since 2009, coinciding with a revised economic outlook for the UK.

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