UK economy ended 2019 in stagnation as service sector slows

The UK economy ended 2019 in “stagnation”, amid long-term uncertainty and rising business costs, according to a new report.

The British Chambers of Commerce (BCC) said its research suggested “protracted weakness” across the economy, affecting firms in manufacturing and services.

Investment plans remain weak by historic standards, while cash flow has only improved slightly from its lowest level in eight years, said the BCC.

Its survey of more than 6,400 businesses, covering the final quarter of 2019, highlighted a worsening picture in the services sector, which accounts for almost 80% of economic output.

Suren Thiru, head of economics at the BCC, said: “The UK economy limped through the final quarter of 2019.

“The fourth quarter was characterised by a broad-based slowdown in the dominant services sector with all key indicators weakening in the quarter, amid sluggish household expenditure and crippling cost pressures.

“Despite some improvements, indicators in the manufacturing sector remain very weak by historic standards and, with indicators for domestic and export orders continuing to contract, the near-term outlook for the sector remains challenging.

“A faltering service sector together with listless manufacturing activity points to a downbeat outturn for UK GDP growth in the fourth quarter of 2019.”

BCC director-general Dr Adam Marshall said: “The end of political deadlock at Westminster must also bring action to renew business confidence and tackle the prolonged stagnation that’s affecting so much of the UK economy. The Government must use its newfound majority to take big decisions to stimulate growth.

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“If ministers take action to reduce up-front costs, move key infrastructure projects forward, and to help businesses on training, they’ll be rewarded with increased investment.

“However, they also must move quickly over the coming weeks to ensure that Brexit is done right. A clear future trading relationship with the EU is also crucial to many firms’ future investment and growth prospects.”