UK businesses expect zero growth in next 3 months, shows survey

People walk on New Bond Street in London, Britain, June 15, 2020. Reuters/Henry Nichols/File photo

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LONDON, July 31 (Reuters) – British businesses don’t expect any growth in the next three months, as rising cost of living underpins consumer demand, a monthly survey showed on Sunday.

The Confederation of British Industry (CBI) said members registered higher-than-average growth in the three months to the end of July – slightly faster than the three months since June – but expects this to subside in the coming months.

“As firms and consumers are being harassed by rising prices, private sector activity has almost come to a standstill,” CBI economist Alpesh Paleja said.

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The Bank of England is widely expected to announce on Thursday its biggest interest rate hike since 1995, raising rates to 1.75% from 1.25% to tame inflation that had already hit 40 years of 9.4%. is at a high level. read more

However, the BoE has warned that the UK economy is likely to contract later this year, when a 40% hike in regulated energy tariffs in October affects consumers, and predicts the economy will contract slightly next year. .

The United States shrank in both the first and second quarters of this year, meeting the commonly used definition of recession. read more

Last week the International Monetary Fund predicted that Britain would see the weakest growth of any major economy other than Russia next year.

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The CBI said its monthly output increased from +5 to +8 for the remaining three months from July to June based on surveys of manufacturers, service companies and retailers. The expected July balance for the next three months was zero, up from -3 in June.

The CBI said manufacturers expect the current slow growth to continue, while consumer services and retail businesses are seeing a decline in sales, and business services growth is expected to slow down.

This is surprising, given that strong inflation is pushing real wages down sharply, and consumer confidence is at an all-time low.

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Reporting by David Milliken; Editing by David Holmes

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