U.K. Business Says Outlook Unclear as Brexit Slowdown Forecastby
CBI says economy was on firm foundations prior to referendum
Says gauges of sentiment, investment intentions fell sharply
Britain’s biggest business lobby said there’s still little clarity on the longer-term economic impact of the country’s decision to leave the European Union.
As debate rages over how much weight to put on reports showing some resilience since the June 23 referendum, the Confederation of British Industry pointed to weaker sentiment and investment intentions as omens of slower future expansion.
“Overall, the economy was on firm foundations prior to the referendum vote, which should stand it in good stead as it weathers the challenges arising from Brexit,” the London-based CBI said on Sunday. “Nonetheless, we are likely to see some deterioration in growth ahead.”
The group commented as it published its monthly “growth indicator,” which showed the outlook remains weak. Companies’ expectations for private-sector activity in the next three months rose in August, though the measure remains far below the average of the first half of the year.
“While sentiment might recover to some degree as further details emerge of the government’s plans for the Brexit negotiations, it is likely to remain subdued,” the CBI said. That could impact longer-term business decisions, it said.
U.K. factory activity reached a 10-month high in August as an index of manufacturing recovered after a slump following the Brexit vote, IHS Markit said last week. A gauge of services, the largest part of the economy, will be published on Monday, and is also expected to show a partial bounce back from July.