British businesses have grown at their slowest rate in almost six years last month as fears of a no-deal Brexit and rising global trader barriers increase. A survey by the Confederation of British Industry (CBI) reveals private sector growth dropped to -3 in February from zero in January. This was its lowest reading since April 2013, fueling concerns that Britain's private sector has been shrinking in the run-up to the scheduled Brexit leave date of March 29. Firms warned that the outlook for the next three months was bleaker with the US-China battle over import tariffs harmed global trade.
Manufacturing was among the worst affected parts of the economy, although it was a sharp slowdown in the usually robust services sector that accelerated the drag on growth in the three months to February. The CBI said its growth indicator showed that private sector businesses were under pressure from squeezed household earnings and the prospect of a no-deal Brexit, which deterred business investment. CBI chief economist Rain Newton-Smith said, “More and more companies are hitting the brakes on investment and day-to-day business decisions are becoming increasingly problematic.”
A survey last week showed manufacturers increased their stockpile of raw materials and finished goods by the most since records began in 1992 as they prepared for the possibility of border delays after Brexit. Newton-Smith said, “Until politicians can agree 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 have become increasingly concerned that households maintained their spending last year by dipping into their savings and through extra borrowing.