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Back with a bang: Business confidence back to pre-Brexit level

The surge in UK business confidence has neared to levels last seen in May and June
The surge in UK business confidence has neared to levels last seen in May and June (Source: Getty)

Business confidence has bounced back to pre-referendum levels, according to a major poll published today.

The business monitor of 500 businesses from YouGov and the Centre for Economics and Business Research (CEBR) climbed to 112.4 in September, on a ranking where scores above 100 signify corporate optimism.

The surge in confidence, near to levels last seen in May and June, was driven by a big jump in organisations’ optimism for both the UK economy and their own prospects over the coming year. In June, the same index stood at 112.6 while in May it was 112.5.

For the first time since the referendum, over half of businesses are optimistic about their own prospects for next year.

In September, 53 per cent of organisational decision makers were optimistic about their own company’s prospects over the coming 12 months, compared to 48 per cent in August and 46 per cent in July. In June, 53 per cent were optimistic

However, the pollsters warn that the renewed optimism could be vulnerable to recent talk of a so-called hard Brexit which implies that the UK would prioritise immigration restrictions over access to the European Single Market.

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“It is now clear that business confidence took a short-term stumble in the wake of the EU vote instead of a long-term fall. The panic that gripped businesses in the aftermath of the referendum has subsided and they are now much more level-headed and optimistic about the future of both their own organisations and the UK’s economy in general,” said Scott Corfe, director at the CEBR.

However, he added: “Once the shape of our economic relationship with the EU becomes clearer, these figures could shift notably.”

“We won’t know until next month what impact speculation about whether the government is planning a hard or soft Brexit will have on business confidence,” said Stephen Harmston, head of YouGov Reports.

Read more: A hard Brexit could cost up to 75,000 jobs

In terms of today’s survey for September, there was a nine percentage point increase month-on-month in the number of businesses that are optimistic about the UK economy over the coming year.

Meanwhile, there has been a 10 percentage point decrease in the number of businesses that are pessimistic about the country’s economy in the next 12 months.

Read more: The IMF is too gloomy: Britain's economy is getting stronger not weaker

​The strengthening of business confidence over the past month is in line with a healthy return to optimism in consumer confidence registered last week by YouGov and CEBR over the same period.

“The resounding return of business confidence in the UK echoes the progress made among consumers over the past few months,” said Harmston.

However, it could be a different picture for firms in the capital, which are still showing signs of disquiet in the aftermath of the referendum.

The Recruitment and Employment Confederation (REC)’s monthly jobs report showed hiring of permanent staff slipped back in the capital, despite growing for the fifth consecutive month around the rest of the country.

“There remains a degree of caution in London,” said director of policy at the REC Tom Hadley. “This is likely to be because of uncertainty around the longer-term impact of the referendum result within the financial sector in particular.”

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