Business demands Boris Johnson acts as economy stagnates

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Boris Johnson was urged to boost growth as the British Chambers of Commerce warned that the economy stagnated in the final quarter of last year.

The latest survey by the business lobby group found conditions in the services sector deteriorated compared with the third quarter and that manufacturing activity was “listless” in the three months to the end of December.

The BCC is one of the country’s most influential business groups and its quarterly survey is closely-watched.

It was based on responses from 6,478 companies in manufacturing and services employing more than 800,000 staff. They were surveyed between November 4 and November 25, before the general election last month that delivered an 80-seat Tory majority.

Adam Marshall, director general of the group, called on the government “to take big decisions to stimulate growth”.

Investors are hopeful that the election result will end the instability that marred UK politics last year, dampening business investment, and help to spur growth in the faltering economy.

The BCC said that it “found protracted weakness across most indicators of economic health in the final quarter of 2019”. It reported a “broad-based slowdown” in the services sector, the powerhouse of the economy, which accounts for about 80 per cent of output.

Although there were signs of improvement in manufacturing, the survey pointed towards another contraction in export orders, the first time since 2009 this indicator had remained negative for two straight quarters. Domestic orders also continued to contract.

The balance of manufacturing companies that intend to raise investment in machinery and plant fell to its weakest in eight years, the BCC found. It said cashflow, a sign of companies’ health, “remains very weak across both manufacturing and service sectors”.

Mr Marshall said: “The end of political deadlock must also bring action to renew business confidence and tackle the prolonged stagnation that’s affecting so much of the UK economy.

“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.”

He also urged the government to “move quickly over the coming weeks to ensure that Brexit is done right”.

Attention is turning to the impending negotiations between London and Brussels over the UK’s future relationship with the European Union. These will include agreeing a free trade deal with the EU as well as talks on a broad range of other issues, including security co-operation and sharing data.

The prime minister has said that the 11-month transition period that starts when the UK formally leaves the EU at the end of January will not be extended beyond December 31.

However, Brussels has said that it believes this leaves a “very challenging” time frame for complex negotiations. The deadline raises the prospect the UK could leave the EU without a comprehensive trade deal being reached.

Mr Marshall said: “A clear future trading relationship with the EU is also crucial to many firms’ future investment and growth prospects.”