SMALL and medium-sized enterprises (SMEs) need more certainty and stability to counteract the effects of sluggish economic growth, the Confederation of British Industry (CBI) has warned.
Rain Newton-Smith, the chief economist at the CBI, warned that the business association expects growth to “remain lukewarm” over the next couple of years, creating a difficult environment for British business. Her comments were in response to preliminary GDP figures, released on Wednesday, which showed that the UK’s economy grew by just 0.3 per cent during the second quarter of 2017.
While this represents a slight improvement on the 0.2 per cent growth in the first quarter of the year, it is still lower than the 0.6 per cent growth which was recorded in the second quarter of 2016.
“Economic growth has remained sluggish in line with our expectations,” said Newton-Smith. “We expect growth to remain lukewarm over the next couple of years, so providing businesses with certainty and stability has never been more important.
“A limited transition period as we leave the EU where the UK stays in the single market and a customs union until a final deal is in force, would help create a bridge to a new trading arrangement. It would give businesses the confidence they need to invest, expand and create jobs.”
The gross domestic product represents the total value of goods and services produced over a particular period. The first six months of the year has seen a slowdown in the manufacturing sector and the retail sector – two key indicators of economic health.
At the end of June, research from the Centre for Economics and Business Research reported that SMEs were facing their worst business conditions in more than three years, as rising inflation outstripped wage growth and the weak pound increased costs.
However, Chancellor Philip Hammond has reassured businesses that the government intends to invest in key areas to aid future growth.
“Our economy has grown continuously for four and a half years, delivering record levels of employment,” said Hammond.
“We can be proud of that; but we are not complacent. We need to focus on restoring productivity growth to deliver higher wages and living standards for people across the country. That is why we are committed to investing in infrastructure, technology and skills to deliver the best possible base for strong future growth.”