TOP NEWS: UK Business Confidence Slumps To Fresh Post-Brexit Lows

LONDON (Alliance News) - Business confidence in the UK during the fourth quarter of 2018 has ...

Alliance News 5 November, 2018 | 8:47AM
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LONDON (Alliance News) - Business confidence in the UK during the fourth quarter of 2018 has slumped as firms grow increasingly cautious in an uncertain environment, a report by the England & Wales accountancy body explained Monday.

The latest ICAEW Business Confidence Monitor showed confidence dropped sharply to negative 12.3 in the fourth quarter, from negative 0.2 in the quarter prior and positive 7.0 in the second quarter. This is its lowest level since the second quarter of 2009, shortly after the financial crisis.

"Business confidence has fallen for the second quarter in a row and is now firmly negative," ICAEW explained in a statement. "Indeed, the Confidence Index is now lower than it was following both the 2016 referendum and the 2017 general election. The decline is widespread across most sectors and all regions, and is shared by both quoted and unquoted companies, and larger and smaller businesses."

After the June 2016 Brexit referendum, third quarter 2016 confidence plummeted to negative 10.2. After the June 2017 general election, confidence stood at negative 8.0 points.

Despite this, sales volumes growth remains around 4% and expected to remain at this level over the next year. Profit growth, however, was "marginally down" and expected to continue to be so over the next 12 months.

"The challenge which continues to show the highest rate of expansion is regulatory requirements," ICAEW added. "Although the number of businesses referencing these as a growing concern has fallen away in the current quarter compared with the third quarter 2018, this concern remains close to its historical high point. It is also above the level of a year ago, and it is well above all other factors that are causing difficulties for businesses."

In light of these concerns, capital investment by firms was described as "subdued" which was "reflecting caution on the part of businesses. Planned capital investment growth is particularly weak", ICAEW explained.

"Business confidence is at its lowest point since the financial crisis ten years ago," ICAEW said. "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."

By Ahren Lester; ahrenlester@alliancenews.com

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