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British Chambers of Commerce trims UK growth outlook over Brexit uncertainty

The British Chambers of Commerce trimmed U.K. growth forecasts for 2019 and 2020 amid Brexit uncertainty and a global economic slowdown.

The business group lowered its growth estimate to 1.2% from 1.3% for 2019 and to 0.8% from 1.0% for 2020, assuming an orderly departure of the U.K. from the European Union. The group, which warned that a no-deal Brexit would lead to further revisions, maintained its projection at 1.2% for 2021.

Business investment in the U.K. is expected to fall 1.5% this year, compared to a 1.3% decline estimated previously, and slip 0.1% in 2020. Together with the decline of 0.4% in 2018, this would represent the longest period of sustained full-year declines in business investment for 17 years.

Business investment is due to rise 0.8% in 2021, compared with a prior 1.1% growth rate estimated.

Brexit uncertainty and the threat of a no-deal exit of the U.K. from the EU are expected to limit investment intentions over the forecast period, the business group noted.

Meanwhile, the decade to 2020 would reflect the weakest average annual productivity growth on record, it added.

The body expects the economy to rebound in the third quarter with a 0.3% expansion after contracting for the first time since 2012 in the second quarter.

"The continued pressure on business activity and cashflow from historically high stockpiling, loss of business and costly contingency planning is expected to limit the extent to which economic activity is able to rebound over the near term," said Suren Thiru, head of economics at the British Chambers of Commerce.