The economy suffered a “short, sharp fall” in the days after the EU referendum, before confidence rushed back and things returned to “business as usual”, a new survey has found.
Like most other economic indicators, BDO’s confidence tracker has jumped back in August after hitting a three-year low in July. Firms told the accountants they are still hiring, activity is still climbing and more are optimistic than pessimistic about the six months which lie ahead.
The headline score climbed to 98.7 from 97.9, BDO said, slightly down on the 100 mark which indicates the long-term average, but above 95 which roughly separates growth from contraction.
A score of 100 also indicates an annual growth rate of around two per cent, implying that the economy is still growing somewhat slower than it would be had the UK voted to stay inside the EU. Forecasters expect the UK economy will expand by between 0.1 and 0.3 per cent in the crucial third quarter of the year, with post-referendum data starting to come through thick-and-fast.
The latest growth forecast from the British Chambers of Commerce (BCC), also out today, predicted the UK would narrowly avoid a technical recession, as a string of City forecasters and economists have recently upgraded their outlook for the UK economy.
“These results suggest that the UK experienced a short, sharp fall in business activity post-referendum, but that businesses are confident that this will quickly reverse,” BDO found.
Peter Hemington, a partner at the accountants added: “After the immediate Brexit scare, businesses are becoming more confident, as they start to find that, for most of us, it’s back to business as usual.
“But ongoing uncertainty and the likely long-term damage if we exit the Single Market, are concerns which continue to justify support for growth.”
BDO called for the government to “take advantage of cheap borrowing costs” to invest in infrastructure.