Business Immo, the real estate website
UK Property Market Chart Book

Slump in business investment a concern for policymakers

Published on

A research produced by

Slump in business investment a concern for policymakers

The second estimate of GDP showed unrevised growth of 0.5% in Q4 last year. Consumer spending was the driver of activity, rising by 0.7%, while business investment disappointed with a 2.1% contraction. Business investment still climbed by 5% over 2015 as a whole but this decrease in Q4 will spark concerns that the upcoming referendum on the UK’s membership of the EU may be deterring companies from spending. While survey evidence indicates that investment intentions remain robust across most sectors, the debate on the UK’s future is beginning to heat up, and over the coming months business confidence is likely to suffer until the outlook for the coming years is more certain.

Net trade remained a drag on output in Q4 with export growth hampered by lacklustre growth in the UK’s biggest trading parters. Survey evidence from the euro area indicates a slight easing in economic momentum to begin the year and there are concerns among policymakers as to how much the recent turmoil in financial markets could weigh on growth. However, Mario Draghi has repeatedly reaffirmed the ECB’s committment to do ‘whatever it takes’ to ahcieve their inflation target and we expect euro area growth to pick up slightly in 2016. Indeed, some further policy easing looks very likely when the ECB meet in March with both a further cut in the deposit rate or a broadening in the QE programme both still on the table as policy options.

Source : RICS

This research is available only to BI or BIE subscribers

Please log in, or contact us to find out how to subscribe

Keywords : RICS