In 2019, annual GDP growth was recorded at 1% - the lowest annual growth recorded since 2009.

At its 30^th January 2020 meeting, the BoE’s MPC voted seven members to two to maintain the Bank Rate at 0.75% and to maintain the stock of sterling non-financial investment-grade corporate bond purchases.

In December 2019, CPI hit its lowest rate in three years as there was a decline in prices in the ‘restaurants and hotels’ and ‘clothing and footwear’ sectors.

The ONS reported that consumer prices rose at an annual rate of 1.3% in December 2019, down from 1.5% in November 2019, and reflected the lowest rise since November 2016.

In January 2020, the ONS reported that real average weekly earnings had grown by 1.6% in the three months to November 2019 - reaching their highest level since April 2009 - and by 1.8% on the same month in 2018.

According to Mintel’s Report Small Business Banking - UK, October 2019, 33% of small businesses categorise their financial situation as ‘healthy’, while 53% believe their financial situation is ‘OK’.

The slow growth seen in the economy as a whole appears to have had minimal impact on small businesses, who are generally getting by. 11% say that finances are tight but that they are getting by, while just 3% are struggling.

However, there are differences between firms of different sizes. Those with 11-100 employees are significantly more likely to have ‘healthy’ or ‘OK’ finances (96%) than businesses with one employee (82%) or 2-10 workers (85%). Larger firms tend to be better established with more secure income streams.

Despite the uncertain environment meaning businesses are unable to fully commit to long-term strategies without an element of risk, UK business turnover rose by 7.2% between the start of 2018 and the start of 2019.

However, in 2019, there were a total of 17,196 insolvencies in England and Wales - a six-year high.

The most recent data for December 2019 showed that gross lending to non-financial businesses was £23.7 billion, excluding overdrafts. Within this total, gross lending to large businesses was £18.6 billion, while gross lending to SMEs was £5.1 billion.

Net lending to large businesses was recorded at £852 million in December, while net lending to SMEs was recorded at -£185 million.

The overall availability of credit to the corporate sector was reported to have fallen in Q4 2019. Within this total, the availability of credit provided to medium and large businesses was reported to have fallen slightly in Q4, but was unchanged for small businesses. The overall availability of credit to the corporate sector was expected to slightly decrease in Q1 2020.

Loan write-offs rose by 13% in 2018 as the ongoing uncertainty caused by the Brexit impasse reduced business confidence about the stability of economic growth over the foreseeable future.

The Bank of England’s credit conditions survey for Q4 2019 showed the proportion of lenders tightening their criteria on business loans outweighed those making credit more easily available by a margin of just over 9% - reflecting the deepest cut since the end of 2008 on this index.

Several independent forecasters have stated that the UK’s GDP will continue to grow in 2020, even with the possibility of the UK not agreeing a trade deal with the EU by the ened of the transition period, but at a similarly low rate to that recorded in 2019.

The BoE has estimated that the economy will grow by just 0.75% in 2020 (down from its November 2019 estimate of 1.25%), 1.5% in 2021 (down from 1.75%), and 1.75% in 2022 (down from 2%).

The BoE warned that Britain’s economy would be able to grow at only 1.1% over the next three years without generating unwanted inflationary pressures - about half the rate recorded in the years before the EU referendum.

The main risk to the outlook remains continued uncertainty regarding the UK’s future trade agreements post-Brexit. On a more global scale, any further escalations in US-China trade tensions would further dampen world economic growth and trade with a knock-on impact on the UK economy.

According to the latest ICAEW Business Confidence Monitor™ (BCM), business confidence rose to +1.3 in Q1 2020 - up from a decade-low of -20.6 in Q4 2019.

In Q1 2020, confidence improved in all industry sectors in comparison to the previous quarter – although some remained in negative territory, including property, retail and wholesale, and business services.

Although the UK leaving the EU has created uncertain times, albeit one with opportunities, a longer running issue has been that of productivity levels. Since the financial crisis, UK productivity has only risen by 0.5% per year since the pre-crisis trend of 2.5%.

The UK’s long-term economic challenge is to address the long-standing shortfall in productivity levels relative to other advanced economies.