Brexit, weak global demand to hurt UK in 2020, industry warns

Brexitpressures and political uncertainty have prompted the Confederation of BritishIndustryand a manufacturing trade body, MakeUK, to downgrade their growth forecasts for next year.

Official figures have shown that Britain's economy is growing at theweakest annual pace since 2010, andindustryleaders see little or no improvement in2020, even if Prime Minister Boris Johnson wins re-election and secures aBrexitdivorce deal by a January31 deadline.

The CBI on Monday predicted economic growth of 1.3 per centthis year and 1.2 per centin2020, followed by a pick-up to 1.8 per centin 2021, assuming Johnson reaches a trade deal with the EU that leads to no tariffs and little divergence from EU rules.

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"Alongside perennialBrexituncertainty, (businesses) are also contending with softerglobaldemand," CBI chief economist Rain Newton-Smith said.

Back in July, the CBI forecast growth of 1.4 per centthis year and 1.5 per centnext.

MakeUKhalved its forecast for manufacturing growth next year to 0.3 per centfrom 0.6 per cent, though it kept its forecast for growth in the overall economy in2020unchanged at 1.4 per cent, up from 1.3 per cent this year.

"Export orders have increased slightly this quarter, indicating greater confidence from foreign customers about purchasingUKgoods as concerns about an end of year no-dealBrexitfade," MakeUK's chief executive, Stephen Phipson, said.

Britain's economy has slowed since the June 2016 referendum decision to leave the European Union, with manufacturing especially hard hit due to concerns about disruption to supply chains, on top of pressures from the US-China trade war.

Johnson'sBrexitplan - which he was unable to pass through parliament before he called an early election on December12 - sees Britain leaving the EU on January31, and then negotiating a new trade deal to take effect at the end of2020.

Johnson has said he will not allow transitional arrangements to continue beyond the end of2020, but many trade experts say this leaves too little time to negotiate a good deal.

If a post-EU transition deal expires at the end of2020without an agreement settled for future trade ties, the CBI predicted a sharp slowdown in growth in 2021 to just 0.4 per cent- theweakest since the financial crisis.

"A no-dealBrexitwould put the brakes onUKgrowth and realise businesses' worst fears," Newton-Smith said.