UK economy holds steady but outlook remains weak: CBI

A general view of the Canary Wharf financial district in London, Britain October 24, 2017. REUTERS/Kevin Coombs

LONDON (Reuters) - Growth in Britain’s private sector held steady in the three months to October after weakening recently, and the inflation hit to consumers and Brexit concerns for companies mean growth will probably stay modest, an industry survey showed.

The Confederation of British Industry’s monthly indicator of output for manufacturers, retailers and services companies remained at +11, its joint lowest level since June.

“Growth in the economy has remained relatively stable, although the pace of growth was a little slower than expected, particularly for retailers and manufacturers,” CBI chief economist Rain Newton-Smith said.

Britain’s economy slowed sharply in the first half of 2017 although it picked up a bit of pace in the third quarter.

The Bank of England raised interest rates for the first time in a decade on Thursday as it moved to head off what it sees as the inflationary impact of Brexit, even as it said economy will probably remain stuck in a slow gear over the next three years.

Output expectations for the next three months fell to +12 from +18 in September, the weakest reading since January.

The CBI said it expected growth to remain modest as inflation eats further into household spending power in late 2017 and early 2018 and uncertainty about Brexit dampens business investment next year.

“We still expect more support to growth from net trade than has been the case in the recent past, as a lower exchange rate and firm global growth lift UK exports and softer domestic demand bears down on import growth,” it said.

Reporting by William Schomberg; Editing by Andy Bruce