LONDON: September 12, 2016. In its first forecast since the Brexit referendum, the 52-strong British Chambers of Commerce (BCC) expects the UK economy will shrink £43.8 billion by 2018.
The BCC has downgraded UK GDP growth from 2.2 percent to 1.8 percent in 2016; from 2.3 percent to 1.0 percent in 2017; and from 2.4 percent to 1.8 percent in 2018.
The organization, whose members employ five million workers throughout the UK, said the Conservative government's inability to explain a post-Brexit strategy, its plans for implementation and a timeframe, is the reason for the country's weakest growth forecast since 2009.
UK business investment is expected to fall by 2.2 percent in 2016 and a further 3.4 percent next year. This compares to a pre-referendum growth forecast of 4.5 percent in 2016 and a further 7.4 percent in 2017 and 2018.
Despite the fall in the benchmark value of Sterling against the U.S. Dollar, UK export growth will halve from 4.8 percent to 2.3 percent this year and grow 3.0 percent next year and 4.0 percent in 2018. As a result there will be a slowdown in employment growth as "uncertainty weighs on recruitment intentions," according to the BCC.
Adam Marshall, BCC acting director general said: "Aside from a clear timetable for negotiations with the EU, ministers must act to support business investment and confidence. They should start with the long list of business-boosting infrastructure projects that have been put on hold for far too long - including a firm decision on a new airport runway, new nuclear investment, and road and rail schemes.
"We also need to see policies to encourage business investment, such as revisions to our outdated business rates system, which penalizes companies for investment in plant and machinery, and hits firms before they have even turned over a penny," he added.
Marshall's comments follow Brexit advocate and current UK government trade minister Liam Fox's description of British businesses as "fat and lazy".
Meanwhile the UK's GMB labor union has called on the government to make a quick decision on constructing Heathrow's third runway saying: "An estimated 370,000 tonnes of UK steel will be used to expand [it], nearly 10 percent of the total steel produced in the UK for domestic use in 2015." (Pictured: Heathrow Terminal 2 steel construction).
With Tata Steel reporting a loss of £370 million on the sale of its UK long products business to Greybull Capital, the GMB said a decision to go-ahead with Heathrow would secure the jobs of 700 steel industry workers between 2021 and 2026.