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UK business morale slides, especially in manufacturing

UK business activity wilted in the third quarter, especially in manufacturing, according to a survey on Friday that boded poorly for the country’s economy in late 2019 as it faces the Brexit crisis and a global slowdown.

The British Chambers of Commerce’s (BCC) survey of 6,600 companies showed domestic manufacturing sales fell at the fastest pace since late 2011. Growth in the much larger services sector also slowed.

Overall, the survey chimed with other signs of a sharp deterioration in business confidence in Britain as the Oct. 31 Brexit deadline nears with little clarity on how or if the country will leave the European Union.

The BCC survey also pointed to the biggest drop in manufacturing export orders in 10 years.

“Our findings point to a worrying drop-off in UK economic activity, with unrelenting uncertainty over Brexit and a notable slowing in global growth prospects dragging down almost all the key indicators in the quarter,” BCC head of economics Suren Thiru said.

“Looking forward, weakening orders, confidence and investment intentions suggest that unless action is taken the UK’s current weak growth trajectory could drift markedly lower over the near term.”

Consumer spending, boosted by the fastest wage growth in 11 years and low unemployment, has helped to offset the economic slowdown although there have recently been some signs of a weakening in job creation.

The BCC said more manufacturers reported a worsening of cash-flow than those reporting an improvement. The difference was the widest since late 2011.

A renewed drive to stockpile to avoid disruption after the Oct. 31 Brexit deadline – shown in an IHS Markit/CIPS survey on Monday – is likely to put more pressure on manufacturers’ finances.

Expectations for profits declined particularly sharply in the manufacturing sector, falling to their lowest level since late 2011, the BCC said.

The BCC survey was conducted between Aug. 26 and Sept. 16.

Reporting by Andy Bruce; Editing by William Schomberg

Source: UK Reuters

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Brexit crisis pushes UK business expectations to weakest since 2011

Pessimism in British businesses rose in the three months to September to the highest level in almost eight years, as the escalating Brexit crisis weighed heavily on companies, a survey showed on Sunday.

The Confederation of British Industry’s (CBI) gauge of private sector activity held steady at -6% in the three months to September, the same as in the period to August.

But business expectations for the coming three months dropped to their lowest since December 2011, across the spectrum of manufacturing, services and distribution, according to the survey of 567 companies.

Business investment has stagnated since the 2016 Brexit vote, leaving the economy more reliant on household spending for its growth.

After more than three years of crisis since a majority of Britons voted to leave the European Union, it remains unclear how, when or even whether the country will leave the bloc it joined in 1973.

Prime Minister Boris Johnson has promised Britain will leave the EU on Oct. 31 with or without a deal and has said he would not seek an extension even if the conditions of a recently passed bill were met, forcing him to do so.

“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,” said CBI chief economist Rain Newton-Smith.

Closely-watched business surveys from IHS Markit covering the performance of the manufacturing, construction and services sectors in September are due on Tuesday, Wednesday and Thursday.

Reporting by Andy Bruce

Source: UK Reuters