01:51 GMT21 October 2020
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    The 'business as usual' approach taken by many firms following the Brexit vote will not last, the British Chambers of Commerce (BCC) has cautioned. The leading business body says that the UK's current economic momentum will slow over the next couple of years amid the growing political uncertainty.

    In the immediate aftermath of UK's June 23 referendum, many economic analysts were reassured by the resilience that the British economy displayed. While sterling has taken several hits, the markets bounced back and several key sectors, like manufacturing and retail, even saw gains.

    However, after a summer of positive economic indicators, one of the most influential UK business groups, the BCC, is warning companies to steel themselves for a stormier winter.

    Director General of the BCC, which represents more than 100,000 businesses, Dr. Adam Marshall, pointed to the ongoing uncertainty over the UK-EU relationship, and higher inflation, which is set to "dampen medium term growth".

    "In the absence of a clear road ahead, many companies have been adopting a 'business as usual' approach in the months since the referendum, which has kept conditions buoyant this year and prevented a sharp slowdown in growth," Dr. Marshall said.

    "Lower sterling and rising inflation are now starting to affect business communities and consumers across the UK. While a lower pound is a boon for some exporting businesses, many others see the latest devaluation of sterling less positively, as they are unable to benefit from it."

    It isn't all bad news. The BCC's has increased its economic forecasts for GDP growth from 1.8% to 2.1% in 2016, and 1% to 1.1% in 2017.

    However, it has also downgraded expectations for 2018 from 1.8% to 1.4%.

    Suren Thiru, Head of Economics at the BCC, explained that Brits can expect to feel less worse off in the coming years, with inflation on goods rising, but wages not keeping up.

    "Higher inflation and continued uncertainty over Brexit will weigh on the UK's growth prospects, with consumer spending and business investment likely to be hardest hit. Average earnings should hold steady but inflationary pressures are expected to erode real wages, which will hit the spending power of households," Said Mr Thiru.

    "That said, we do not expect the economy to enter into a recession over the next few years."

    The BCC is calling on the UK government to provide more political clarity, to help business leaders better plan for the future.

    Currently, companies still do not know if Prime Minster Theresa May intends to negotiate for the UK to retain its access to the lucrative EU single market.

    Director General of the BCC, Dr. Adam Marshall, said that such glaring unknowns continuing will hold back British businesses from being competitive.

    "As the Brexit negotiations commence, steps will need to be taken to help ambitious firms overcome the risks, real and perceived, borne out of political uncertainty. Ministers should start by clarifying the future status of existing EU workers as soon as possible, to end the insecurity now facing employees and businesses alike."


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    economic development, GDP, forecast, economy, Brexit, British Chambers of Commerce (BCC), Europe, United Kingdom
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