Several reasons for UK business confidence drop include the Brexit, budget fallout, China’s impending slowdown and UK consumer activity levels. The high level of uncertainty shows business confidence dropping due to disparity for future and maintenance plans for corporations and businesses.
A poll of 1,000 chartered accountants represented by the ICAEW showed fragile consumer and business confidence similar to a time in 2012 when the economy was contracting.
Accordingto ICAEW Chief Executive Michael Izza:
“Business confidence is fragile and there is an absence of resilience in the UK economy at the moment. A combination of factors has led to this negativity and includes the EU referendum, slowing domestic sales, Chinese growth slackening and the recent budget.
“Businesses cannot plan with confidence and this applies regardless of sector, ownership or size of company. Weakening growth will also mean lower tax receipts for the chancellor, making it even harder for him to meet his deficit goal.”
The group said the latest drop in confidence suggested GDP will expand just 0.3% in the second April-to-June quarter. That chimes with a recent Bank of England prediction that growth will likely falter as companies defer spending decisions until after the 23 June referendum, which polls suggest will be close run.
The survey of chartered accountants found companies’ export sales had improved thanks to a weaker pound, which makes UK goods cheaper for overseas buyers. But it said sales growth in the UK had “slowed significantly”.