Friday 8 December 2017, The pace of capital investment has fallen in 2017 and is forecast to slow even further in 2018 according to the latest ICAEW Economic Forecast. Business investment is forecast to be 2.1% this year, the second weakest since the global financial crisis. As companies continue to ‘wait and see’ what kind of post-Brexit settlement is achieved, ICAEW forecasts investment growth of just 1.5% in 2018.
ICAEW has also lowered its forecast for GDP growth in 2017 to 1.5% though expects a marginal improvement in 2018 with growth of 1.6%, despite a weaker pound at last starting to help both businesses who export and manufacture.
“With corporate cash balances still very high and interest rates near all-time lows, businesses are clearly able to invest given the right economic and political outlook. So, if the government were to deliver greater clarity over future trading opportunities, businesses could well be convinced to accelerate their spending. That means moving quickly to the second phase of the negotiations with the European Union but more importantly, agreeing a transition deal early in the new year.”
The ICAEW Economic Forecast for Q4 2017 reveals:
Michael Izza adds: “The UK needs to be able to compete effectively in the global economy, especially when we leave the EU. Exports are starting to grow and we’re beginning to see some signs of rebalancing within the economy. But without accelerated investment in skills, training and technology coupled with an increase in businesses exporting, we remain concerned about the medium and long term outlook.”
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