The Institute of Chartered Accountants in England and Wales (ICAEW) has suggested that confidence amongst businesses has ‘slumped’ as a result of ongoing Brexit uncertainty.
The ICAEW’s Business Confidence Monitor recently revealed that confidence deteriorated from -12.3 in the fourth quarter of 2018 to -16.4 during this quarter. According to the Institute, every sector currently stands in ‘negative territory’, excluding the IT and communications industry.
Additionally, the ICAEW stated that it expects GDP growth of just 0.1% this quarter.
‘Companies at the moment are unclear about the future,’ said Michael Izza, Chief Executive of the ICAEW.
‘Directors have the exceptionally difficult task of explaining within their annual reports the impact Brexit might have on their business models and operations. Companies are making decisions now about jobs, supply chains, headquarters and asset locations – incurring significant, and possibly unnecessary, cost and upheaval.
‘We fear the destructive effects of a no deal outcome on the economy, so urge our politicians to work together to break the Brexit deadlock and help restore business confidence.’
Research carried out by Lloyds Bank has revealed that confidence amongst UK firms has ‘reached a two-year high’.
The Bank’s confidence index rose from 23% in January 2018 to 25% in the second quarter of this year, and is now ‘above the long-term average’. UK businesses are now ‘more confident than at any point since the EU referendum vote’, according to Lloyds Bank.
It did, however, warn that Brexit uncertainty poses ‘the greatest threat to business confidence’ in the short-term, alongside ‘weaker UK demand’. 36% of firms ‘expect a negative impact on their business’ if the government fails to reach a trade agreement with the EU.
The research also suggested that many firms are choosing not to put additional recruitment and investment plans into place.
‘Despite concerns on the wider economy, businesses are still relatively upbeat, as our latest report shows business confidence hitting a two-year high since the Brexit vote,’ said Sharon Geoghegan, Managing Director of SME Banking at Lloyds Banking Group.
‘As we look ahead, the external environment remains mixed, as Brexit uncertainty and weaker UK demand are businesses’ biggest concerns for the next six months.’
Data published by the Institute of Chartered Accountants in England and Wales (ICAEW) has revealed that confidence amongst businesses in the UK has taken a ‘major knock’, and has fallen into negative territory.
The ICAEW’s Business Confidence Monitor fell from a reading of 6.7 in the second quarter of this year to -8 during the third quarter.
Issues that came to light as a result of the snap General Election and the subsequent hung Parliament contributed towards the negative reading, the ICAEW suggested.
The data also revealed that the ongoing Brexit negotiations between the UK government and EU officials have also been having an effect on firms’ confidence levels.
Matthew Rideout, Director of Business at the ICAEW, commented: ‘Since the announcement of the General Election, a vacuum has been left with government’s attention swallowed by a hung Parliament and the start of EU negotiations.
‘The industrial strategy has been lost in the void, coupled with no clear signal towards post-Brexit policy. As a result, businesses cannot see through this haze of uncertainty and are struggling to look further than the end of the next quarter in terms of their decision making.’
24 Feb 2014
Following recent surveys that indicate business confidence is at a high in 2014, Lloyds Bank has released a report showing that consumer confidence has also improved.
The Spending Power report shows that 57% of those interviewed believe their financial situation is ‘excellent’ or ‘good’, and that they will be better off in six months’ time. January also saw the greatest improvement of confidence in the economy.
Figures also show that more people were inclined to save than spend their extra cash. Director of personal current accounts at Lloyds, Philip Robinson, said: ‘With consumer sentiment continuing its upward trend, together with the highest positive levels seen to date towards personal finances, 2014 continues to show signs of a more stable year’.
With inflation still below the Bank of England’s 2% target, both consumers and businesses are now looking forward to a rewarding year. Hopes are high that wage growth will be able to overtake the rising cost of living, further contributing to the sense of wary optimism about the coming year.
14 Nov 2013
UK inflation fell from 2.7% to 2.2% in October, the latest figures from the Office for National Statistics (ONS) have revealed. However, inflation is likely to remain above the 2% target for some time to come, according to the British Chambers of Commerce (BCC).
The fall in CPI inflation was largely driven by a drop in transport prices, including fuel price cuts made by some of the UK’s leading supermarket chains, together with a fall in some air fares.
CPI inflation has now reached its lowest level in over a year, sparking speculation that the Bank of England may need to raise interest rates.
Despite the recent downward trend, the BCC has warned that it will be difficult to bring inflation below the 2% target, particularly following recent announcements of price rises by many of the UK’s largest energy firms.
David Kern, Chief Economist at the BCC, said, ‘The larger than expected fall in inflation will ease pressures on businesses and consumers, particularly at a time when wages aren’t rising at the same rate. However while we expect inflation to fall further over the next year, this will not be a smooth process. Some of the October declines are likely to be reversed, especially when energy price increases take effect’.
‘The UK has been more inflation-prone than other major economies. While latest figures show US inflation at 1.2% and eurozone at 0.7%, ours has been above the 2% target for more than four years. The MPC will see this fall as a sign that there is no short-term need to tighten monetary policy, even though the unemployment threshold is likely to be reached earlier than expected. However, the committee must focus on ensuring price stability to avoid threatening business confidence.’