The likelihood of a No-Deal Brexit is hammering the profitability of British business firms with a key growth index falling to a record five-year low.
British businesses are lamenting their weakest growth in nearly six years during the past three months from December 2018 to February 2019. They blamed fears of a No-Deal Brexit for the sharp fall in business, as well as inimical global trade barriers set in place by the United States, said the Confederation of British Industry (CBI).
The CBI's index of private-sector activity over the past three months plummeted to -3 in February from zero in January. CBI noted this was its lowest index since April 2013 when the United Kingdom was still recovering from the Great Recession of 2008.
"More and more companies are hitting the brakes on investment and day-to-day business decisions are becoming increasingly problematic," said CBI chief economist Rain Newton-Smith.
Newton-Smith said that until politicians "can agree on a deal that commands a majority in Parliament and protects our economy, growth will continue to suffer and long-term damage will be done."
Economists are increasingly worried that households maintained their spending last year by dipping into their savings and by resorting to unnecessary but extra borrowing. Bon the other hand, businesses cut investment by 3.7 percent in 2018 at a time when most developed economies were booting their investments at home and overseas.
A survey taken last week revealed that British manufacturers are stockpiling record quantities of goods as they prepare for the possibility of border confusion after Brexit occurs on March 29.
Fears of a No-Deal Brexit continue to escalate as Prime Minister Theresa May has been unable to secure Parliament's support for her Brexit transition deal. May, however, has proven amenable to delaying Brexit beyond its trigger date of March 29.
The Bank of England forecasts the United Kingdom's economy will grow by a scant 0.2 percent in the first quarter of this year. It is also confident the British economy's growth in 2019 will be the weakest since 2009, and this even if Brexit goes smoothly, which it won't.
The CBI survey was based on responses from 650 businesses throughout the UK engaged in retail, manufacturing, and services.
