Written by: Keith Tully
Date: Tuesday 18th July, 2017
Confidence among UK business about their prospects for the coming year reached a six-year low in recent weeks amid concerns about Brexit and rising inflation.
An index put together by the research and analytics firm IHS Markit put the UK’s business confidence level for June far below figures recorded early this year and lower than at any point since October 2011.
The index is created on the basis of expectations among British companies and specifically whether they anticipate seeing their activity levels rise or fall over the course of the coming 12 months.
In June, the index figure for overall business confidence was as low as +35 per cent, which was well down on the figure for February 2017, which was recorded at +52 per cent.
Consumer price inflation has become a major concern for economists and for employers in recent months with price rises generally outstripping wage increases across the country.
The latest figures on the UK’s headline rate of inflation show it having fallen from 2.9 per cent in May to 2.6 per cent in June.
However, a rate of 2.6 per cent still puts pressure on household finances and consumer spending, with concerns now widespread among businesses about the potential economic impact of the UK’s impending departure from the European Union.
A lack of clarity around the UK’s intended approach to Brexit is also regarded by IHS Markit’s experts as having hindered optimism among British businesses last month.
“Companies have become increasingly worried about the business outlook, largely as a result of heightened political uncertainties and the potential impact of Brexit,” said Chris Williamson, IHS Markit’s chief economist.
“The drop in confidence pushed the level of UK optimism below that seen in the eurozone for the first time in seven years, and contrasts with multi-year high levels of optimism in the United States and Japan,” he added.
Elsewhere, the latest EY Item Club report cited a loss of momentum in consumer spending as a key reason why it has decided to bring down its forecast of growth in the UK economy from 1.8 per cent to 1.5 per cent for 2017.
“The inflationary squeeze on consumers has been painful and shows little sign of easing any time soon,” said Peter Spencer, chief economic adviser to the EY Item Club.
15th March 2018 Conviviality, the owner of the two major drinks retail operations Bargain Booze and Wine Rack, has revealed that it recently identified an unexpected £30 million tax bill for liabilities owed to HMRC.
13th March 2018 After moving the main budget to the autumn with the intention of giving businesses more certainty throughout the year, Philip Hammond promised a brief affair when he addressed the House of Commons
12th March 2018 Experts Raise Concerns Over ‘Lack of Transparency’ in Pre-Pack Administration Deals
8th March 2018 The clothing retailer New Look is planning to shed close to 1,000 jobs and close 60 of its UK stores as bosses attempt to rescue and restructure the ailing high street operation.
28th February 2018 Financial crises at Maplin and Toys R Us have promoted both retailers to call in administrators within a matter of hours of each other.
Every day we help companies just like yours turn things around against seemingly impossible odds, regardless of your situation we can help. Find your nearest office today.