The gradual winding down of Brexit-fuelled stockpiling will sap the energy out of the UK and Cumbria economy, a business leader has warned.

Rob Johnston, chief executive of Cumbria Chamber of Commerce, also expressed concerns that current stockpiling in anticipation of Brexit, was diverting investment from tackling the biggest issue facing the economy – productivity.

Mr Johnston spoke out after the British Chambers of Commerce downgraded its Gross Domestic Product (GDP) forecasts for both 2020 and 2021.

While it slightly upgraded growth from 1.2 per cent to 1.3 per cent for 2019, due to the effect of stockpiling, it downgraded its outlook for 2020, from 1.3 per cent to 1 per cent, and from 1.4 per cent to 1.2 per cent in 2021 due to the unwinding of “historically high” inventory levels and “weaker” business investment.

The British Chambers of Commerce said its latest forecast was a “clear warning sign” that the next Prime Minister must break the Brexit deadlock in Westminster to prevent a further economic slowdown. It also said the possibility of a no-deal Brexit, along with the wind down in stockpiling and the high up front cost of doing business in the UK would “suffocate investment activity over the near term”.

Mr Johnston told in-Cumbria: “One of the reasons why the economy is not doing as badly as it could have been is down to stockpiling. It has been driving the economy.

“It is an underlying issue and has hit all sectors in Cumbria, particularly manufacturing and food and drink, where there has been stockpiling of components and ingredients.

“It has had a very strange affect to be honest. But it has certainly been taking the energy out of the economy.

“We have seen the worst of stockpiling and it is slowing down, but it is going to affect economic growth.

“There is not an easy way out of this until we get a Brexit resolution. We need to get through this. 

“We’re looking towards the Autumn Statement and whatever Government is in power, to outline how we’re going to move forward and realise potential economic growth. One of the fundamentals is investment in infrastructure, and we hope that features heavily in the Autumn Statement.”

Mr Johnston said the Brexit debacle and the actions of businesses desperately trying to pre-empt an outcome, were diverting money away from areas where it was needed most. 

“The biggest challenge we’re facing is productivity – whether that’s people, systems and processes,” he said.

“It is why we’re doing so much on the issue through the Cumbria Business Growth Hub. We have seen money that would have been invested in capital or people, that would help address this, instead spent on inputs and stockpiling.”

The British Chambers of Commerce also warned that there could be significant revisions to its forecast if there was a “messy and disorderly exit from the EU”. 

It also downgraded business investment from for 2019, from -1 per cent to -1.3 per cent and from 0.6 per cent to 0.4 per cent in 2020. It did, however, forecast growth of 1.1 per cent in 2021.

Elsewhere, it downgraded growth in both manufacturing and services in 2020 and 2021, despite slight upgrades in 2019.

It did upgrade growth in household consumption and expects average earnings to outstrip inflation over the three-year period.

Commenting on the forecast, Suren Thiru, head of economics at the British Chambers of Commerce, said: “The revisions to our forecast suggest that the UK economy is likely to remain on a disappointingly subdued growth path for some time to come.

“The deteriorating outlook for business investment is a key concern as it limits the UK’s productivity potential and long-term growth prospects.”