Brexit and inflation set to hit economic growth in 2017
Economic growth is expected to fall sharply next year as rising inflation and uncertainty around Britain's relationship with the EU dent consumer confidence and business investment.
Despite revising up UK growth forecasts for 2016 and 2017, the British Chambers of Commerce (BCC) is warning that the collapse in the value of the pound following the June 23 vote will begin to take its toll.
BCC director-general Dr Adam Marshall said: "Lower sterling and rising inflation are now starting to affect business communities and consumers across the UK. While a lower pound is a boon for some exporting businesses, many others see the latest devaluation of sterling less positively, as they are unable to benefit from it.
"Given our findings, deeper incentives for both investment and exporting will be needed in the months and years ahead. As the Brexit negotiations commence, steps will need to be taken to help ambitious firms overcome the risks, real and perceived, borne out of political uncertainty."
His comments come as the BCC upgraded its UK GDP growth forecast from 1.8% to 2.1% for 2016, driven by stronger than expected growth in the third quarter.
It also revised up forecasts for 2017, from 1.0% to 1.1%. However, it has also downgraded expectations for 2018 from 1.8% to 1.4%.
The group expects weaker economic activity, an erosion of real wage growth, a slowdown in export growth and public sector net borrowing to rocket.
"It is imperative that Government do all it can to help UK businesses overcome risk and take advantage of opportunities. Ministers should start by clarifying the future status of existing EU workers as soon as possible, to end the insecurity now facing employees and businesses alike," Mr Marshall added.