Private sector
activity continued to fall in the three months to September (-6%), at the same
pace as the quarter to August, according to the CBI’s latest monthly Growth
Indicator.
The composite
measure, based on 567 respondents, reported the 11th consecutive rolling
quarter of flat or falling volumes. This month’s result reflected a sharper
decline in business and professional services, coupled with falling retail
sales.
Looking forward,
private sector activity is expected to drop at a faster pace in the quarter to
December (-16%) – the weakest expectations since December 2011.
The decline is
driven by expectations of falling activity across all sub-sectors:
manufacturing, business & professional services, consumer services and
distribution. Within distribution, retail volumes are also expected to fall
albeit at a slower pace.
Across the economy
more broadly, GDP growth has been volatile in the first half of 2019, driven by
companies stockpiling ahead of previous Brexit deadlines and a change in the
timing of car plant annual shutdowns. If we can avoid a no-deal Brexit, we expect
the economy to grow modestly further ahead, with living standards rising thanks
to a pick-up in wage growth and low inflation. However, a no-deal Brexit would
likely hit activity and financial markets significantly. For more detail, see
our July economic
forecast.
Rain Newton-Smith,
CBI Chief Economist, said: “Decision-makers in boardrooms across the country
have been watching politics this week with a heavy heart.
“Despite all the
noise, what must not be forgotten is the importance of getting the UK
economy back on track, by supporting investment and innovation which is the
bedrock of productivity, and higher living standards.
“While the Spending
Review provided improved investment in education to help pupils prepare for the
workplace of the future, warm words on infrastructure urgently need backing up
with more detail, particularly on how the UK will move to a net-zero carbon
economy.
“Above all, getting
a deal that can pass through Parliament, is acceptable to the EU and protects
our economy remains the goal. Exiting the EU without a deal will only extend
uncertainty, damage our economy and dent hopes of progress on domestic policy.”
