Business confidence across the country remains in positive territory despite falling to a four year low in the wake of the referendum.
The number of exporters expecting an increase in total exports also remained in positive territory, although it fell to 20 per cent.
The latest half-yearly Lloyds Bank business confidence report suggests that the UK economy is headed for a gradual slowdown rather than a deep contraction following the vote to quit the European Union earlier this year.
However, the companies surveyed warned that economic uncertainty and weaker domestic demand over in the next six months were two of their primary concerns, driving the confidence index – an average of respondents’ expected sales, orders and profits over the next six months – down to 12 per cent, from 38 per cent in January this year.
“The EU referendum vote has introduced a level of uncertainty for companies as the UK decides on the best model for its future relationship with the EU, and this is likely to continue for the foreseeable future,” Tim Hinton, Lloyds Banking Group mid markets managing director said.
He added that while sentiment has fallen to a four-year low, it remains in positive territory and well above the lows reached during the global financial crisis.
Expectations for exports of goods to Canada and the US were boosted by sterling’s recent performance against the dollar. The pound dropped sharply against the dollar following the Brexit vote but has since made up some of its lost ground following better-than-expected economic data.
In the latest indication of the desire of non-EU countries to do more business with the UK, Export Development Canada (EDC) is planning to open a London office on Thursday. Canada is currently the UK’s third-largest trading partner, with over 20bn Canadian dollars (£11.5bn) of exports last year.
Separately, declining merger and acquisition activity and downward pressure on fees will hit profitability at the UK’s top law firms, lawyers have predicted. However, new opportunities in London’s booming fintech sector will help to offset these risks.