Dip predicted in 2017 economic growth

Thursday 3 November 2016

The economic climate may prove more challenging for contractors next year, with the Confederation of British Industry (CBI) downgrading its GDP growth prediction to 1.3 per cent.

However, the organisation also maintains its 2016 forecast of 2 per cent growth, demonstrating that the economy has remained resilient since the Brexit vote. And indeed, over recent months data has suggested business confidence remains high following the referendum, with Business Matter magazine revealing in August that 72 per cent of SMEs felt confident despite the result.

However, this new information from the CBI reflects a combination of uncertainty, rising inflation, and a fall in the value of the pound that is expected to impact on 2017's growth.

As a result, the CBI is calling on the government to take strong steps in its upcoming Autumn Statement, explaining that it needs to outline how it will safeguard the strengths already present in the economy.

CBI chief economist Rain Newton-Smith stated: "The UK economy was on firm footing going into the Referendum and it's vital that we now seek to preserve these economic strengths."

"Uncertainty means that business investment will remain flat next year before contracting in 2018, and downside risks to our forecasts are even more acute," she added, explaining that "the government will need to set out an ambitious, pro-enterprise agenda that will get firms investing now, and lift productivity in the future across all UK regions while balancing the books over the longer term".

For contractors, the government's Autumn Statement may provide more of an indication of how the economy will progress in 2017. Taking steps to safeguard their business from any dips, such as by conducting pricing reviews to protect against potential impact from rising inflation, will be among the things to consider in the coming months as 2016 draws to a close. 

In recent months, the contribution that self-employed individuals bring to the economy has been highlighted to the government on a number of occasions. Recently, the IPSE stressed that a flexible economy is essential for creating an entrepreneurial state.

These comments followed shadow chancellor John McDonnell's Labour Party conference speech, during which he outlined plans for the nation's economy. The creation of an "entrepreneurial state" was highlighted as a key factor in securing the long-term prosperity of the country.

IPSE director of policy and external affairs Simon McVicker was quick to highlight that a flexible economy, which largely comes from having a strong base of self-employed individuals, is crucial in forging an entrepreneurial state.

By Victoria McDonnell

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