Monday, 25 July 2016

Britain could be heading towards recession after Brexit

Business confidence has fallen at its fastest pace since January 2009, the Confederation of British Industry said in a report today.

Since Britain voted to leave the EU, business expectations of how many orders will come in over the next three months have dropped to levels not seen since January 2012, the CBI's findings suggest.
Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said the survey 'adds to evidence that the economy is heading for a recession.'

While optimism is low, total output among over 500 manufacturers surveyed in the CBI's Industrial Trends Survey has increased at the fastest pace for two years according to dailymail

Over half of firms said they were less optimistic about the UK's general business situation than three months ago, while 5 per cent said they were more optimistic, leaving a balance of minus 47 per cent.

Investment intentions have also taken a tumble, with building investment plans down from 6 per cent in April to minus 23 per cent this month, the CBI said.

Investment plans for machinery and plant items slid to minus 5 per cent this month, down from 17 per cent in April.

Total orders for this month hit minus 4 per cent, compared with minus 2 per cent in June, while export order books fell to minus 22 per cent, up from minus 14 per cent over the period.
Looking forward, manufacturing firms surveyed said they expect order levels for the next quarter to remain flat.

Rain Newton-Smith, the CBI's chief economist, said: 'Manufacturers picked up the pace over the second quarter, with output growing solidly. We're also seeing encouraging signs of a boost to export competitiveness from a weaker sterling.

'But it's clear that a cloud of uncertainty is hovering over industry, post-Brexit. We see this in weak expectations for new orders, a sharp fall in optimism and a scaling back of investment plans.'

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