A “potent combination of fragile financial markets, volatility in oil prices, concerns over terrorist attacks and regional issues including the prospect of a Brexit and the US presidential race” had UK firms on the back foot, said Grant Thornton
The balance of businesses saying they were optimistic about the future dropped by 21 percentage points to 44 per cent.
UK firms were still more hopeful than others around the world. Net confidence, which measures the difference between the number of businesses that said they were feeling positive and those that had a negative outlook, came in at a three-year low of 26 globally.
Read more: SME confidence is at a three-year low
Robert Hannah, chief operating officer at the professional services firm said that the UK economy still had “quite strong” fundamentals, arguing that “the knock in confidence could be a case of perception”.
Fewer businesses plan to make capital investments over the next year, according to the research, while the number of firms reporting a shortage of orders jumped by 12 percentage points.