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UK economy ends year on a whimper

By EARLE GALE in London (CHINA DAILY) Updated: 2020-01-03 00:00

The United Kingdom's economy ground to a near halt in the final quarter of 2019, according to a survey from the British Chambers of Commerce.

The quarterly report from the group, known also as the BCC, made stark reading for the nation's new Conservative Party government as it strengthened its grip on power in a landslide general election win on Dec 12.

The BCC estimates that the UK economy grew by 1.3 percent during 2019 but by only 0.2 percent in the final quarter. It expects growth to slow to 1 percent in 2020.

After quizzing 6,500 companies in November, the BCC reported that the economy stagnated because of long-term uncertainty, rising business costs, and a global economic slowdown.

The Guardian newspaper said the services sector, which contributes almost 80 percent to the UK's economic output, worsened in the quarter, while manufacturing orders were extremely low, and manufacturers' investment plans were at their lowest point for eight years.

Suren Thiru, who leads the BCC's economics department, said: "The fourth quarter was characterized 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."

Thiru said that "despite some improvements", the manufacturing sector remains very weak "by historic standards". Qatar-based news channel Al Jazeera said the report highlights a "protracted weakness" in the UK's economy.

Adam Marshall, the BCC's director general, called on the government to focus on renewing business confidence, to tackle "the prolonged stagnation that's affecting so much of the UK economy".

"The government must use its newfound majority to take big decisions to stimulate growth," he said.

But he also said the government will need to move fast if it is to leave the European Union in the right way, and that "a clear future trading relationship with the EU" was crucial.

Prime Minister Boris Johnson has said he wants the UK to leave the EU on Jan 31 and for it to have a trade deal in place by the end of 2020. The Independent newspaper noted that Johnson continued to stoke fears among businesspeople that the UK could leave the EU without a divorce deal.

Andrew Gray, editor of the website Politico Europe, told Al Jazeera: "I think the danger in terms of UK-EU relations is that things again get pretty tense between the two sides with the pressure from the UK side to get things done very quickly." But a Treasury spokesperson told The Independent the economy will improve once the UK leaves the EU.

"Our economy has been held back by Brexit uncertainty for too long," the unnamed source said. "We are getting Brexit done, so we can move on and open a new chapter for our economy."

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