UK business is in wait-and-see mode following the December general election as business optimism flatlines across the UK, according to a report published today.
Accountancy and business advisory firm BDO said UK business is waiting to see the impact of the new government and its policies, particularly how the UK will leave the EU.
Peter Hemington, a partner at BDO, said business is hoping for a “Boris Bounce”.
The firm’s optimism index, which covers services and manufacturing, remained virtually static (+0.01 points) at 95.72, lingering just about negative territory.
There was no change in services and an increase of 0.09 points in manufacturing.
The lack of change in confidence followed a trend seen in the four most recent elections in which businesses adopted a similar approach.
Hemington said: “We’ve seen in the past that post-election changes in optimism take a while to feed through, even where the result is decisive as this.”
He added that the relief over the end of the political chaos may feed its way through into a more “upbeat” approach to hiring and investing.
Despite the uncertain outlook, the firm’s output index increased 0.43 suggesting some short-term positivity, but the disparity between manufacturing and services output indices was stark.
The manufacturing output index fell 0.63 points, its 15th consecutive monthly fall, while services output rose 0.57 points.
The employment rate remains high, but the number of vacancies fell by 59,000 throughout 2019, the biggest drop since the financial crisis.
Hemington said the key challenge for the government is finding a way to kickstart growth in 2020.