UK growth slows as Brexit worries hinder investment, BCC finds

Growth in the UK services sector slowed in the third quarter but the manufacturing sector improved, according to a survey published on Monday, although more businesses in both sector cut their expectations for hiring and investment.

The first quarterly economic survey from the British Chambers of Commerce (BCC) since Britain's EU referendum result found the UK economy had continued to grow but at a lower level than before the Brexit vote.

Taking responses from a mammoth 7,000 companies, the BBC found manufacturers were benefiting from the weaker pound, with a balance of firms reporting improved export sales rose to 17%, from 9% in the second quarter.

The balance of manufacturers reporting increased domestic sales rose to 13% from 9%.

However, the much larger services sector has seen sales suffer since the Brexit decision, with the balance of service sector businesses reporting improved domestic and export sales falling to its lowest level since 2012. Last week's purchasing managers' index report found the services sector's rate of growth slowed in September but not as badly as feared.

Fewer firms in both sectors expect to take on staff in the next year, the BCC found, with services seeing the lowest balance since early 2013.

Both sectors saw a drop-off in confidence that their turnover and profitability will improve in the next year, although both measures remained positive.

The BCC urged the Chancellor to use next month's Autumn Statement to boost business confidence.

“While many manufacturers have seen something of a bounce this summer, the UK's services sector has slowed significantly, and our data suggests that slower growth is likely in the months ahead," said Adam Marshall, acting BCC director general.

"Although it is important not to take one quarter’s figures in isolation, our survey does show that growth has slowed further since the EU referendum. Boosting business must be a key task for government in the months ahead, particularly as forward confidence on turnover and profitability has flagged for firms across the UK."