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The British Chambers of Commerce (BCC) has released its latest economic forecast, upgrading its growth expectations for the UK in 2019 one percentage point to 1.3% but it has downgraded its growth forecast for 2020 to 1% from 1.3% and to 1.2% from 1.4% in 2021.

The BCC has slightly upgraded its growth forecast for 2019, driven by what it said was the exceptionally rapid stock-building early in the year.

It forecasts the immediate boost to UK gross domestic product to come at the cost of more subdued growth in 2020 and 2021 as the unwinding of historically-high inventory levels, coupled with weaker business investment weigh on economic activity.

Business investment is forecast to contract at a faster rate in 2019 and recover more slowly in 2020 than expected in the business group’s previous forecast.

The continued Brexit impasse, including the growing possibility of a no-deal exit, together with the high upfront cost of doing business in the UK and the running down of excess stock, is expected to suffocate investment activity over the short term.

Trade is projected to make a negative contribution over the forecast period as exchange rate volatility, Brexit uncertainty and a subdued global economy weaken trading conditions for UK exporters.

Consumer spending, in contrast, is expected to remain resilient with earnings growth forecast to continue to exceed price growth over the forecast period and unemployment forecast to remain low by historic standards.

The BCC said its latest forecast was a clear warning sign that the next prime minister must set out a clear roadmap for how the political impasse in Westminster could be broken and an agreement reached to prevent further slowdown in the economy.

The Chamber Network is also calling for a strong and clear strategy on the domestic agenda, including urging the next government to use the forthcoming Comprehensive Spending Review to affirm its commitment to delivering major infrastructure projects, such as HS2, that underpin economic growth.

Suren Thiru, head of economics at the BCC, said: “The revisions to our forecast suggest that the UK economy is likely to remain on a disappointingly subdued growth path for some time to come.

“It is increasingly likely that the temporary boost from historically high stockpiling in Q1, which has marginally improved the growth outlook for this year, will be surpassed over the medium-term by the negative impact from the running down of these inventories.

“The downward pressure on business activity and investment intentions from the unwinding of stocks is likely to be exacerbated somewhat by increasing cost pressures and Brexit uncertainty, slowing overall economic growth across the forecast period.”

The deteriorating outlook for business investment was a key concern because it limited the UK’s productivity potential and long-term growth prospects, Thiru said.

On the upside, household spending, a key driver of UK economic output, was expected to be supported by relatively low unemployment and positive real wage growth.

Morning update

Tesco (TSCO) hosts a Capital Markets Day today to share some of the “untapped value opportunities” available to the group.

It takes place at the company’s head office in Welwyn Garden City, Hertfordshire.

It will provide insight into the “Untapped Value Opportunities” available across three pillars: Product, Channel and Customer.

Tesco said it would also cover some of the further opportunities to “max the mix” across the group.

No new material disclosures would be made during the event, it said this morning.

Its next update to the market would be its interim results on 2 October.

On the markets this morning, the FTSE 100 edged 0.2% higher in early trading to 7,368.4pts.

Early risers include PayPoint (PAY), up 3% at 1,102p, Fevertree Drinks (FEVR), up 0.9% at 2,447p, Just Eat (JE), up 0.8% at 637p, Imperial Brands (IMB), up 0.7% at 1,964.8p and Sainsbury’s (SBRY), up 0.6% at 194.9p.

Fallers so far today include Britvic (BVIC), down 0.5% at 887p, Greene King, off 0.4% at 604.6p, B&M European Value Retail (BME), off 0.3% at 332p and Cranswick, (CWK), down 0.1% at 2,578p.

Yesterday in the City

The FTSE 100 closed up 0.2% at 7.357.3pts.

FTSE 100 fallers included DS Smith (SMDS), down 5.1% at 332p, Majestic WINE (WINE), down 3% at 275p, Hotel Chocolat Group (HOTC), down 2.3% at 23p, McColl’s Retail Group (MCLS), down 2% at 75p and Ocado Group, off 1.9% at 1,137.5p.

Shares on the up, included Science in Sport (SIS) which put on 4.5% at 58.5p, Marston’s (MARS) moved 1.3% higher at 114.2p, Marks and Spencer Group (MKS) picked up 1.3% at 218.7p and McBride (MCB), moved 1.2% higher at 83p.

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