The Institute of Chartered Accountants in England and Wales (ICAEW) has downgraded its growth forecast for the UK economy as a result of continuing Brexit uncertainty, falling business investment and declining output.
In its economic insight for the third quarter of this year, the ICAEW now expects growth of 1.1%, down from 1.5%, with business investment down by 0.5%, continuing the downward trend of the past 18 months.
Meanwhile, output fell by 0.2% during the second quarter, as a result of continuing manufacturing weakness and companies reducing stockpiling activity as March's Brexit deadline came and went.
Commenting on the report, ICAEW Chief Executive, Michael Izza, said: 'After the 2008 recession, business investment recovered, but since 2015 it has stalled and gone into reverse.
'While the overriding priority for the government must be to get a good deal, an investment boom is unlikely even if the UK secures an 'orderly' departure from the EU. A withdrawal agreement would not eliminate uncertainty over the future UK-EU trading relationship, and we know structural issues mean firms are more likely to spend money on labour than capital.'
The ICAEW also suggested that structural and measurement issues – such as the focus on services rather than manufacturing and the blurring of lines between consumer and investment spending – will have a 'dampening effect' on investment.