Show caption The service sector worsened in the final quarter of the year. Photograph: Jack Sullivan/Alamy Economic growth (GDP) UK economy in stagnation at end of 2019, survey shows British Chambers of Commerce report says long-term uncertainty is impeding growth Julia Kollewe Thu 2 Jan 2020 00.01 GMT Share on Facebook

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The UK economy ended 2019 in stagnation, under pressure from long-term uncertainty, mounting business costs and a global economic slowdown, according to a business survey.

The British Chambers of Commerce’s (BCC) latest quarterly economic snapshot, based on a poll of 6,500 firms across the country in November, painted a gloomy picture of the economy at the end of the last decade.

The service sector, which accounts for almost 80% of economic output, worsened in the final quarter of the year. Indicators for factories’ export and domestic orders were negative for two consecutive quarters for the first time in a decade, and manufacturers’ investment plans hit an eight-year low.

Cash flow, a key indicator of the health of businesses, improved slightly from its lowest level in eight years but remained very weak across the manufacturing and service industries.

Suren Thiru, the BCC’s head of economics, said: “The UK economy limped through the final quarter of 2019.

“The fourth quarter was characterised by a broad-based slowdown in the dominant services sector with all key indicators weakening in the quarter, amid sluggish household expenditure and crippling cost pressures.

“Despite some improvements, indicators in the manufacturing sector remain very weak by historic standards. A faltering service sector together with listless manufacturing activity points to a downbeat outturn for UK GDP growth in the fourth quarter of 2019.”

The BCC is forecasting a slowdown in economic growth to 0.2% in the final three months of 2019, from 0.3% in the third quarter. The Bank of England estimates growth of just 0.1% in the fourth quarter, when high street spending stalled and many firms put investment plans on hold before the election and due to Brexit uncertainty.

The BCC estimates the UK economy grew by 1.3% in 2019. It predicts growth will slow to 1% in 2020, which would be the weakest performance since 2009.

The BCC said the key indicators in the service sector remained well below their historic averages. The balance of firms reporting increased domestic sales minus those reporting lower sales worsened to 11% between October and December, from 15% in the third quarter. Those reporting increased domestic orders fell from 9% to 6%. Both are at their lowest level since the first quarter of this year.

The export sales measure dropped from 6% to 5%, while export orders slipped from 1% to 0%, the lowest level since early 2019. Fewer firms are reporting improved cash flow, and the number of those looking to increase investment or training has also dropped from the third quarter.

Turning to manufacturers, the measures for domestic and export sales improved slightly. However, order books were negative for the last two quarters.

The export orders balance remained stuck at -3%, the first time since autumn 2009 that this measure has been negative for two quarters in a row. This is despite a decline of about 10% in the value of the pound against the dollar and the euro since the 2016 Brexit vote, which has made UK exports more competitive.

The domestic orders balance for manufacturing firms improved from -7% to -1%, but has been negative for two consecutive quarters for the first time since the end of 2011.



Adam Marshall, the BCC’s director general, called on the government to use its newfound majority to take big decisions to stimulate growth.

“The end of political deadlock at Westminster 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 upfront costs, move key infrastructure projects forward, and to help businesses on training, they’ll be rewarded with increased investment.