The CBI’s index of private-sector activity over the past three months dropped to -3 in February from zero in January.
This was its lowest since April 2013, when Britain was still recovering from the global financial crisis. Firms expected similar weakness in the three months ahead, when Britain is due to leave the European Union after over 40 years of membership.
Prime Minister Theresa May has yet to win parliament’s support for a Brexit transition deal although she has paved the way for a possible delay to Brexit beyond its scheduled date of March 29.
“More and more companies are hitting the brakes on investment and day-to-day business decisions are becoming increasingly problematic,” the CBI’s chief economist, Rain Newton-Smith, said.
A survey last week showed manufacturers stockpiled goods by the most on record for any big advanced economy as they prepared for the possibility of border delays after Brexit.
The Bank of England predicts Britain’s economy will grow by just 0.2 percent in the three months to March and growth in 2019 to be the weakest since 2009, even if Brexit goes smoothly.
Britain’s trading partners in Europe are facing weaker growth too, due to trade tensions between the United States and China that have hurt global manufacturers.
The CBI survey was based on responses from 650 businesses in retail, manufacturing and services.