Business confidence ‘at lowest level since 2009’ – ICAEW
A “lack of progress” in Brexit negotiations is being blamed for a measure of business confidence falling to its lowest level since post-crash 2009.
The latest business confidence monitor by the accountancy body the ICAEW showed a sharp drop-off nationwide though FTSE 350 firms were said to be more pessimistic than privately-owned companies.
It found that while sales were stable there was particular weakness in capital investment.
The reading for the fourth quarter, the ICAEW said, followed the humbling Salzburg summit for the prime minister in which her Brexit stance was branded “uncompromising” by the EU – raising fears of a “no-deal” scenario.
While the mood music has since improved, there has also been growing evidence of exasperation at the pace of negotiations as the clock ticks down to March next year when the UK is due to leave.
This has been seen most recently in the latest round of IHS Markit/CIPS Purchasing Managers Index (PMI) activity indicators.
The report covering the manufacturing sector came in at its lowest level since July 2016 – the month after the EU vote – amid low domestic demand despite continued support from the weak pound which makes UK exports more competitive.
The survey covering the powerhouse services sector also did little to ease fears of an economic slowdown in the final quarter of the year.
Its data, also covering October and released on Monday, showed activity at a seven-month low with firms also at their most gloomy on the outlook since July 2016.
In addition to Brexit uncertainty firms also cited the US/China trade war, slowing global growth and financial market turbulence for the cautious approach.
The Bank of England used its Inflation Report last week to warn that growth could sag to 0.3% in the final three months of 2018 – down from a forecast 0.6% in the third quarter which was boosted by a hot summer.
Chris Williamson, chief business economist at IHS Markit, said of the PMI figures: “The survey data suggest that, despite slowing, the service sector is on course to provide the main impetus to economic growth in the fourth quarter, albeit growing at a rate of just 0.2% if current levels are maintained (around half the pace seen in the third quarter).
“In contrast, at current levels, manufacturing is on course to act as a drag on the economy in the fourth quarter with construction making only a weak contribution to GDP.”
Sharron Gunn, ICAEW executive director, said of its confidence survey: “Leaving the EU and its potential impact is at the front of everyone’s minds. – bbc.com