“Snow capped a sluggish start to 2018 for the UK economy, and there’s no disguising that Britain now finds itself in the slow lane for growth,” CBI Chief Economist Rain Newton-Smith has commented.
Referring to the CBI’s Economic Forecast for June (https://bit.ly/2Mi9kg4), she noted that, although businesses can do little to mitigate wider risks, many firms are doing what they can to get themselves in good shape by investing in artificial intelligence (AI) and digitalisation.
Adapting technologies and finding smarter ways of working are just two approaches to improving productivity growth and prosperity, Ms Newton-Smith suggested.
The CBI report confirms that bad weather early in the year hit the construction and retail sectors particularly hard, with overall GDP barely growing in the first quarter (up by just 0.1%).
Although the second three months appears to have been better, the CBI is concerned that consumer-facing sectors are facing a particularly difficult time, with low growth in real household earnings and big changes to the retail sector as businesses respond to the growth of online shopping.
The impact of the bad weather has caused the CBI to amend its forecast for GDP growth for 2018, which it now predicts will be 1.4% rather than 1.5%. The forecast for 2019 remains unchanged at 1.3% (providing, the CBI warns, that there is agreement on a Brexit transition period until the end of 2020 “and no significant bumps in the negotiations”).
Although momentum is set to remain weak in the domestic market, the combination of a low pound and a global economy firing ahead means there has never been a better time for UK firms to get export ready, CBI Principal Economist Alpesh Paleta concluded.