A new business confidence tracker suggests that economic growth is likely to slow significantly over the coming months.
According to the latest report from the Institute of Chartered Accountants in England and Wales (ICAEW), economic growth will begin to slow in the third quarter (Q3) of this year, despite the fact that growth strengthened significantly in the second quarter (Q2).
The group says that GDP growth will slow to just 1.6 per cent in both 2017 and 2018 – down 0.8 per cent on figures recorded over the previous three years.
It also forecast that capital spending will fall by as much as 1.1 per cent over the next year.
Despite this, the accountancy body has said that the outlook for capital investment is “positive” and that businesses ought to take “a leap of faith” and invest for the future, regardless of existing political and economic uncertainties surrounding Brexit and other issues.
Michael Izza, Chief Executive of the ICAEW, said: “Businesses are in no rush to make major capital investments at the moment. With corporate balance sheets and profitability healthy, borrowing costs low and demand from the UK’s major trading partners strong, businesses could be investing now for the future.
“Without this investment, growth will continue to slow, especially as we can no longer rely on consumers to keep spending at the rate they were.”
He added: “This is a crucial time for Government as we go into autumn. The Chancellor has a key opportunity in the forthcoming Budget to announce major policy changes that will encourage businesses to invest and export.
“Without this boost, I fear winter is coming for the UK economy.”