FTSE 350 firms are pessimistic about the UK economy, but the prospect of Brexit doesn't seem to have fazed them, according to a new survey out today.
Companies' confidence in the country's economy is at its lowest ebb since 2012, with just 12 per cent expecting an improvement over the next 12 months. This is down from 40 per cent expecting improvement in December 2015, and 74 per cent last July.
Despite recent data showing EU confidence has been moving up, confidence in the global economy is also very low with just 16 per cent of respondents anticipating an improvement in the next twelve months, the research has revealed
"Declining business confidence linked to slowing economic growth is reflected in the 45 per cent of respondents declaring no change in plans for capital expenditure in the next twelve months,’"said Peter Swabey, policy and research director at governance institute ICSA. "It will be interesting to see whether this situation changes once uncertainty about Brexit has been removed."
However, the FT-ICSA Boardroom Bellwether survey shows that the looming EU referendum has not been a factor in the general gloom among the FTSE firms – fewer than half the companies involved in the research rate a UK exit from the EU as potentially damaging, while only 49 per cent say they have considered the implications of a vote to leave.
According to the data, 37 per cent of companies regard EU membership as having a positive effect on their business, down from 61 per cent in December 2015. Respondents from the FTSE 100 seem to view EU membership more favourably than the 250 – more than twice as many (55 per cent) of FTSE 100 companies feel that EU membership has a positive impact compared with 24 per cent of the FTSE 250.
"Business recognises it is possible for Britain to continue trading across Europe, part of the free trade zone that exists from Iceland to turkey, without handing Brussels £350m a week and EU judges ultimate power over our laws," said John Longworth, chairman of the Vote Leave business council.
"The remain camp’s concerted campaign to do down the economy has failed. In fact it has had the opposite effect as the EU supporters have failed to make a positive case for continuing to hand Brussels more control of our economy, our democracy and our borders."
Meanwhile, a survey out today from Lloyds Bank reveals that financial market volatility and new regulation are seen as the biggest threats to UK growth prospects for the next year.
Almost three quarters (70 per cent) of firms cited these as their biggest worries for the coming 12 months, according to the Financial Institutions Sentiment Survey of more than 100 organisations.
While 58 per cent agreed that the new regulatory environment has resulted in better transparency and a further 63 per cent said it has improved consumer protection, 44 per cent believe it has come at a cost to economic growth.
Despite these knocks to firms' confidence, 78 per cent of companies said they believe the UK will grow in line with or faster than its peers across the G7 in the coming year.
Ed Thurman at Lloyds said: “2016 has already proved to be a very challenging year for the UK financial services sector and this has dented confidence across the sector. The headwinds of economic volatility and new regulation, do not show signs of abating, but the overwhelming view is that the UK will ultimately fare as well as, or better than our G7 peers.”