Confidence in UK business prospects reaches 10-month high but economic optimism falls 20 per cent
Confidence in business prospects has risen to a 10-month high for UK businesses, despite a big rise in concerns over the country’s economic health, according to a new survey.
Over half of companies said that they expected business prospects to improve in the next year, and only five per cent said they expected their business to suffer, says the survey by Lloyds bank.
However, confidence in economic prospects decreased 20 points to a net positive of 14 per cent, reflecting uncertainty as the UK prepares to invoke Article 50 and start the process of leaving the European Union in March 2017.
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Business confidence decreased markedly after the vote to leave the European Union, dropping to levels not seen since 2012. Since then levels have returned to pre-referendum levels, according to the survey of 200 companies.
The survey also highlights significant sectoral divergence, with confidence in consumer services rising by 11 percentage points, while the business services declined by 17 points.
Confidence in manufacturing and construction firms stayed almost flat, up one point at 32 per cent.
Business services companies with cross-border operations could be particularly affected by a so-called “hard Brexit”, in which free trade is significantly restricted. Canada financial services firms, in particular, are lobbying intensely for continued access to the freedoms of the Single Market.
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Hann-Ju Ho, senior economist for Lloyds Bank Commercial Banking, said: “Our November survey shows a small decline in overall confidence but the results as a whole are consistent with solid economic growth continuing in the fourth quarter.”
“In addition, confidence levels in services have caught up with the industrial sector in recent months,” he added.