In its global economic outlook, ACCA said that confidence among UK businesses sank from minus 5.7 at the end of 2015 to minus 25.8 in the first quarter of 2016, “despite no obvious deterioration in economic conditions,” according to the body. This was its lowest reading since the middle of 2012.
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Fears about Britain leaving the European Union also spilled over into the rest of western Europe, where confidence fell to its lowest level since 2013. “It is hard not to see this as a result of the uncertainty caused by the UK’s forthcoming referendum,” the ACCA said.
The report also painted a sombre picture on the prospects for the global economy. Only 14 per cent of firms around the world said they will be increasing their spending on staff, while nearly half of those surveyed said they plan to either cut or freeze employment.
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The proportion of firms cutting back on capital investment also edged up to 42 per cent, from 40 per cent at the end of last year.
The accountants warned that turning around the global economy and boosting confidence would be a tricky task. “Once income begins to drop and businesses stop hiring, getting them to a point where they are confident enough to begin doing so again is difficult,” said Faye Chua, head of business focus at ACCA.