Investment by UK companies is on track to suffer its longest sustained period of decline in 17 years due to continuing Brexit uncertainty, a leading business group has warned.

The British Chambers of Commerce (BCC) forecast that business investment is set to fall 1.5 per cent this year and 0.1 per cent next year, adding to a 0.4 per cent fall in 2018.

The BCC also downgraded its estimate for 2019 economic growth from 1.3 per cent to 1.2 per cent and for next year from 1 per cent to 0.8 per cent.

Commenting on the forecast, Suren Thiru, head of economics at the BCC, said: “Our latest outlook indicates that the UK economy is set to stumble down an ever more sluggish growth path over the near term, unless decisive action is taken.

“The prolonged nature of the Brexit uncertainty, including the still real risk of a no-deal exit, together with a deterioration in global economic conditions are expected to weigh on investment, trade and productivity – important determinants of economic growth.

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“The deteriorating outlook for productivity is a particular worry as it limits sustained wage growth, living standards and the UK’s longer-term growth potential.”

Underscoring the darkening mood, a poll by the Institute of Directors (IoD) published on Monday found that just 13 per cent of small firms and 12 per cent of medium-sized firms believe they are fully prepared for a no-deal Brexit.

Even among large firms – those with 250 or more staff – barely more than a quarter think they are totally ready.

And one in seven companies said they had already moved or set up new operations outside the UK in preparation for Brexit.

“Firms are facing an impossible situation as they try to prepare in advance for the possibility of simultaneous sweeping changes on an unprecedented level,” said Allie Renison, the IoD’s head of trade policy.

“The idea of leaving the EU without a deal in place is certainly the bigger concern, but the prospect of repeated delays [to Brexit] with no clear path forward is far from an appetising prospect for enterprise.”

The BCC warned that preparing for Brexit is sucking up resources and cash that could be used to invest.

This will drag on productivity growth – the increase in economic output per hour worked – the BCC said.

Its forecast suggests that, even without a disorderly Brexit, the UK is on course for its worst decade of productivity growth on record.

A no-deal exit would lead to major, sudden and unanticipated changes for the UK economy and would lead to downward revisions in the BCC’s next forecast.

The group joined the IoD in urging Boris Johnson’s government to negotiate a deal with the EU.

Dominic Raab, the foreign secretary, told the BBC on Monday that the “contours” of a deal with the EU are now clear.

Mr Johnson is meeting with EU leaders including European Commission chief Jean-Claude Juncker on Monday.

“I think this is an important milestone, the prime minister is building on the previous talks that we’ve had since he came to office,” said Mr Raab.