UK business investment on ice until more Brexit progress, warns BCC | Financial Times

UK business investment on ice until more Brexit progress, warns BCC

With rate rise expected to remain on hold this week, British Chambers of Commerce urges ministers to finalise transitional deal  The B...

With rate rise expected to remain on hold this week, British Chambers of Commerce urges ministers to finalise transitional deal


 The Bank of England is expected to keep interest rates on hold at its monetary policy committee meeting on Thursday. Photograph: Graham Turner for the Guardian
Britain’s biggest businesses are warning the economy will remain in the slow lane, as uncertainty from Brexit puts their investment plans on ice despite progress with Brussels.
The interjection by British Chambers of Commerce comes before a meeting of Bank of England’s rate-setting committee this week. The BCC have told ministers they now need to finalise a transitional deal to smooth the Brexit process before firms will increase spending on staff and production capacity, despite the breakthrough last week that moved talks with the rest of the EU on to trade.
Quick guide

What are Brexit options now? Four scenarios

The lobby group said tepid investment levels, weak wage growth and high inflation would lead Threadneedle Street to keep interest rates on hold until the final months of 2019, far later than most expectations. The BCC downgraded its growth outlook for this year from 1.6% to 1.5%, while forecasting a slowdown to 1.1% from 1.2% in 2018.
The Bank’s monetary policy committee is meeting for the first time since raising the cost of borrowing in November – the first rise in interest rates in a decade. The MPC is expected to keep rates on hold at 0.5% on Thursday, although economists will be looking for any clues for when the next rise will come at a time of slowing economic growth.
Adam Marshall, BCC director general, said: “Despite last week’s deal, Brexit uncertainty still lingers over business communities, and is undermining many firms’ investment decisions and confidence.
“Despite pockets of resilience and success, and strong results for some UK firms, the bigger picture is one of slow economic growth amid uncertain trading conditions.”
Business investment in technology and in training for employees is key for driving up economic output as well as productivity, which has been sluggish since the financial crisis – a major cause of low rates of wage growth for UK workers. The government has launched an industrial strategy as well as more funding for skills and research at the budget last month in response.
The MPC decision, due at midday on Thursday, will follow fresh inflation, jobs and wages figures on Tuesday and Wednesday, which are expected to confirm that the squeeze on British households’ spending power is yet to dissipate. The weak pound since the Brexit vote last year is still pushing up the cost of imported goods, while wages are failing to grow above the rate of inflation, despite the lowest levels of unemployment since the mid-1970s.
The consumer price index measure of inflation stood at 3% in October, confounding an expectation for prices to rise further. City economists reckon the CPI will hold steady in November when the figures are released on Tuesday, helping the Bank’s governor, Mark Carney, to avoid writing a letter to the chancellor – which he must do when CPI is more than a percentage point above or below Threadneedle Street’s 2% target.
Analysts at Goldman Sachs say progress in the Brexit talks last week is unlikely to encourage the Bank to move any faster towards higher interest rates, given that the MPC’s economic outlook assumes a transitional period. The investment bank reckons there will be three rate rises by mid-2020, with the next one towards the end of next year.
Advertisement
Some economists expect the MPC will next vote for a rate increase as early as May, while others see the next rise coming later in the year. The Bank has a balancing act to strike between keeping inflation in check to protect consumers from the rising cost of living, and also providing enough stimulus to encourage economic growth.
The central bank’s actions will come in a week when the European Central Bank is also expected to keep interest rates on hold for the eurozone and the Federal Reserve is expected to raise the cost of borrowing as the economy of the US powers ahead at twice the pace of the UK’s. The Fed rate is expected to raise from 1.25% to 1.5%, while the ECB is expected to keep its main rate at 0%.
The Fed meeting will be a landmark one – it is the final appearance for Janet Yellen as chair before she hands over to Jerome Powell, who was picked by Donald Trump to replace her.

Wade Green - Financial Analyst
Name

Business,7,Cryptocurrencies,2,Economy,16,Forex Market,3,Stocks,7,US Markets,1,
ltr
item
Financial Times: UK business investment on ice until more Brexit progress, warns BCC
UK business investment on ice until more Brexit progress, warns BCC
https://3.bp.blogspot.com/-16FTc4b4XAY/Wk5rQLCUz6I/AAAAAAAAAyc/dFuHETTUFJg8S_wKA_zTMcjmI92DSb8HACLcBGAs/s1600/5616.jpg
https://3.bp.blogspot.com/-16FTc4b4XAY/Wk5rQLCUz6I/AAAAAAAAAyc/dFuHETTUFJg8S_wKA_zTMcjmI92DSb8HACLcBGAs/s72-c/5616.jpg
Financial Times
https://www.usafinance.org/2018/01/uk-business-investment-on-ice-until.html
https://www.usafinance.org/
https://www.usafinance.org/
https://www.usafinance.org/2018/01/uk-business-investment-on-ice-until.html
true
3986571483283915381
UTF-8
Loaded All Posts Not found any posts VIEW ALL Readmore Reply Cancel reply Delete By Home PAGES POSTS View All RECOMMENDED FOR YOU LABEL ARCHIVE SEARCH ALL POSTS Not found any post match with your request Back Home Sunday Monday Tuesday Wednesday Thursday Friday Saturday Sun Mon Tue Wed Thu Fri Sat January February March April May June July August September October November December Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec just now 1 minute ago $$1$$ minutes ago 1 hour ago $$1$$ hours ago Yesterday $$1$$ days ago $$1$$ weeks ago more than 5 weeks ago Followers Follow THIS CONTENT IS PREMIUM Please share to unlock Copy All Code Select All Code All codes were copied to your clipboard Can not copy the codes / texts, please press [CTRL]+[C] (or CMD+C with Mac) to copy