Overall UK business confidence fell to its lowest level since October amid the coronavirus crisis, reflecting a drop in both trading prospects and economic optimism.
The Lloyds Bank Business Barometer shows a 17 percentage point drop to six per cent last month.
Economic optimism dropped from 23 per cent, its highest level for 17 months, to three per cent, while trading prospects declined from 24 per cent to eight per cent.
The results, which surveyed businesses between 2 March and 16 March, reveal a sharp fall in confidence to minus three per cent in the second week, matching the December 2011 low. It is otherwise at its lowest point since March 2009 during the global financial crisis.
Responding specifically to the impact of the coronavirus pandemic, over 70 per cent of businesses surveyed said they are or will be affected, demonstrating the impact of the shutdown even before the government’s more stringent measures announced last week.
The FTSE 100 has fallen as low as 25 per cent this month, with stocks in the travel and leisure industries hit particularly badly.
Business confidence in the retail sector saw the sharpest decline, falling 21 percentage points to nine per cent.
The manufacturing sector also saw a big decline from 31 per cent to 11 per cent, while the construction sector fell 15 points to 14 per cent.
Paul Gordon, Managing Director for SME and mid corporates at Lloyds said: “There is now little doubt that businesses across the board are feeling the impact of COVID-19. Many businesses have already had to pause their work and others are trying to adapt to new ways of working.”
Consumer confidence weakens as coronavirus hits
Against the backdrop of increased business pessimism, consumer confidence has weakened two points this month, according to GfK’s consumer confidence barometer.
The research, which was carried during the first two weeks of March, shows the major purchase index decreased eight points, which will worry retailers.
Joe Staton, client strategy director at GfK, said: “Importantly, this research was carried out during the first two-weeks of March, when the coronavirus was headline news but not impacting day-to-day lives of people across all UK nations to the degree we see today.”
“After a run of increasingly positive numbers since last December, we’re now seeing very clear disruption.”
The index measuring the general economic situation of the country during the past 12 months has stayed at -23. Mirroring business confidence levels, expectations for the next year are more pessimistic with the index decreasing six points to -27.
“While we have a long way to drop before we match the devastating numbers seen in July 2008 when the Overall Index Score crashed to minus 39 points, lockdown Britain can only expect further deterioration,” added Staton.