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UK businesses expect strongest output growth since September 2018 – CBI

UK businesses predict the strongest rebound in output in more than a year over the next three months, after a weak end to 2019, adding to expectations of a post-election pick-up in the economy, a survey showed on Sunday.

The Confederation of British Industry said its monthly output expectations gauge – based on responses to its surveys of manufacturers, retailers and the service sector – rose to +12 in January from +1 in December, its highest since September 2018.

But the measure estimating output over the past three months remained very weak at -16, up only a bit from December’s reading of -20, the weakest since the 2008-09 financial crisis.

“It’s great to see business confidence improve but it remains to be seen whether this will feed through to activity,” Rain Newton-Smith, the CBI’s chief economist, said.

Last month the CBI predicted the economy would grow by 1.2% this year, slowing from 1.3% in 2019.

Britain formally left the European Union at 2300 GMT on Friday, starting an 11-month transition period during which Prime Minister Boris Johnson wants to negotiate a trade deal.

While Johnson aims to avoid tariffs on goods, businesses that are part of complex cross-European supply chains fear new border checks will make them uncompetitive.

“The government must work quickly to establish a future relationship with the EU that can deliver prosperity across the whole economy, as well as refocusing its attention on important domestic priorities,” Newton-Smith said.

Reporting by David Milliken

Source: UK Reuters

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UK business output growth falls for first time in 2019

UK business output growth has declined for the first time this year.

BDO’s Output Index, which measures UK business output growth, fell to 98.63 in April from 98.74 in March.

Business confidence also registered another decline in April, slipping by 0.36 points to 95.74 – the lowest level the index has been since 2012.

As the imminent threat of a no-deal Brexit was lifted last month, activity in the manufacturing sector is expected to diminish due to unprecedented levels of stockpiling tailing off.

BDO’s Manufacturing Output Index, which tracks output growth in the sector, declined to 97.27 in April. This marks a year-on-year decrease of 8.32 points and compares to its most recent high of 103.26 in September 2018.

In further gloomy news for the manufacturing industry, confidence has hit a 30-month low.

BDO’s Manufacturing Optimism Index, which shows how businesses expect output to develop in the next three to six months, declined to 101.09 in April from 103.73 in March. The index has not been this low since November 2016 and reflects concerns by manufacturers that they expect growth to moderate in the coming months.

Optimism in the UK’s services sector fell for a ninth consecutive month after it plummeted by 4.15 points in March. The index shows that optimism dropped to 95.06, just 0.06 points off negative territory. Despite the extension of Article 50 until October, businesses still don’t have the clarity they desperately need on the future long-term relationship the UK will have with the EU.

Peter Hemington, partner at BDO, said: “The only certainty businesses have at the moment is that the UK government still doesn’t know exactly how or when the UK will leave the European Union. We are seeing the impact of this confusion, with business confidence plummeting.

“An extension of Article 50 alone is insufficient to restore sentiment among businesses. In the coming months, the government should look at further policy interventions, such as increasing the Annual Investment Allowance, to help businesses invest and stimulate the UK economy.”

By Rachel Covill

Source: The Business Desk