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B2B Economic Outlook - UK - June 2019

“The government has said that it is committed to a “green” Brexit and to maintaining environmental standards. The government is also expected to remain committed to the EU’s renewables generation targets and carbon emission reduction targets. Therefore energy and environmental policy is unlikely to change post-Brexit. That means it will be business as usual for utility operators for the foreseeable future. However the prolonged period of uncertainty may affect investor confidence and delay investment decisions, putting major capital projects at risk, especially in the energy sector.
The biggest threat of Brexit is its economic impact, with affordability issues potentially impacting utilities in an economic downturn by increasing pressure on operators to reduce costs and keep household bills down.”
– Claudia Preedy, B2B Analyst

This Report looks at the following areas:

  • Economic overview
  • Business health
  • Special focus: utilities
  • What’s next?

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Table of contents

  1. Overview

      • What you need to know
        • Economic overview
          • Business health
            • Special focus: utilities
              • What’s next?
              • Economic Overview

                • GDP growth slowed to its lowest rate for six years in 2018
                  • Figure 1: Annual GDP growth rate, 2010-18
                • Bank rate remains at 0.75%
                  • Figure 2: Bank rate, 2008-18, by date of adjustment
                • CPI rate expected to remain slightly below 2% target over coming months
                  • Figure 3: Consumer Price Index, January 2018-March 2019, (12-month rate)
                • Average weekly earnings grow at fastest rate since financial crisis
                  • Figure 4: Average weekly earnings, total pay, January 2018-February 2019, Great Britain
              • Business Health

                • UK businesses report steady sales growth
                  • Figure 5: UK business turnover, 2018, at the start of the year, by business sector
                • Company insolvencies on an upward trajectory
                  • Figure 6: Underlying company insolvencies in England and Wales, Q3 2016-Q1 2019
                • Brexit uncertainty as well as low confidence and sales growth are holding back business investment
                  • Figure 7: UK PNFCs net rate of return, Q3 2016-Q4 2018
                  • Figure 8: UK total business investment, Q4 2016-Q4 2018, (chained volume measures and not seasonally-adjusted)
              • Special Focus: Utilities

                • Trends in household energy consumption
                    • Figure 9: Average UK domestic gas and electricity consumption, 2008-17
                  • Total household expenditure on energy
                    • Figure 10: Total UK household expenditure on energy, 2010-17, (£ million)
                  • The economic contribution of the energy and water and sewerage sectors
                    • Figure 11: GVA generated by the electricity, gas, steam and air conditioning supply sector, 2012/17, (£ million at current price estimates)
                    • Figure 12: GVA generated by the water supply and sewerage sector, 2012-17, (£ million at current price estimates)
                  • Decarbonisation of UK economy drives capital investment in UK energy sector
                      • Figure 13: Investment in the electricity and gas industries, 2010-17
                    • …but investment in clean energy has stalled since 2016 due to changes in government policies
                      • Investment in water and sewerage industry
                          • Figure 14: UK capital expenditure on water and sewerage services, 2015/16-17/18
                        • Brexit is unlikely to affect energy and environmental policies, but prolonged period of uncertainty could impact investor confidence
                        • What’s Next?

                          • Uncertainty continues to cloud businesses’ outlook
                            • Business confidence remains low
                                • Figure 15: Business confidence index, Q1 2018-Q2 2019
                              • GDP growth expected to remain subdued in 2019
                                  • Figure 16: Forecast GDP development, 2017-23
                              • Appendix – Data Sources, Abbreviations and Supporting Information

                                  • Abbreviations

                                  B2B Economic Outlook - UK - June 2019

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