Confidence among UK businesses has fallen to its lowest level since 2008 amid a lack of progress in Brexit negotiations, according to new figures published today.
The Institute of Chartered Accountants in England and Wales' (ICAEW's) Business Confidence Monitor index showed a sharp fall in confidence since last quarter from -0.2 to -12.3, lower than after both the 2016 referendum and last year’s general election.
The accountancy institute blamed a lack of progress in Brexit negotiations as one likely reason for the decline, with the figures falling sharply after Theresa May’s Chequers plan was rejected by EU leaders at the Salzburg summit in September.
FTSE 350 companies have a more negative outlook than privately-owned businesses, according to the index, though the decline in confidence is widespread across most sectors and all regions.
Last week chancellor Philip Hammond unveiled his Budget by announcing the era of austerity is “finally coming to an end”, but also set aside a total of £2bn in the event of a no-deal Brexit.
The survey of 1,000 chartered accountants revealed 42 per cent of businesses were less confident about their economic prospects over the next year, compared with 31 per cent last quarter. Only 22 per cent said they were more confident, compared to 33 per cent the previous quarter.
Despite this, growth in general sales volumes is still roughly four per cent and is expected to remain at this level over the next 12 months.
A closely followed index out today shows that the UK services industry saw its slowest growth since March. The purchasing managers’ index, compiled by IHS Markit and the Chartered Institute of Procurement & Supply, was down to 52.2 in October from 53.9 in September.
Sharron Gunn, ICAEW executive director, said: “Business confidence is at its lowest point since the financial crisis ten years ago. Leaving the EU and its potential impact is at the front of everyone’s minds.
“This is a difficult time to run a business, let alone finance the major investments the UK economy will desperately need post-Brexit to drive growth. The Budget offered some relief to business but more significant action is needed by government to provide stability and reassurance.”
A government minister today said the UK and EU are close to striking an agreement on financial services access post-Brexit, while Brexit secretary Dominic Raab has claimed a deal is possible by 21 November.