Business confidence ‘crashes’ to lowest point since 2012
Business optimism has โcrashedโ to its lowest level since September 2012, according to a new report from accountants and business advisors BDO.
BDOโs Optimism Index, which shows how businesses expect output to develop in the next three to six months, plummeted to 96.10 in March from 99.79 in February.
According to the firm, the report registers the โworst monthly dropโ in the optimism index since November 2008, and added that, in โabsolute termsโ, sentiment is now weaker than its previous low point after the UKโs vote to leave the EU in 2016.
The services sector, which comprises around 80% of UK GDP, drove the overall decline in confidence with the sector index falling by 4.15 points to 95.13 in March. Despite the plunge in optimism, BDOโs Output Index, which measures UK business output growth, held steady at 98.74 in March, up 0.42 from 98.32 in February.
Peter Hemington, partner at BDO, said: โContinued uncertainty about Brexit has led to a severe worsening of expectations about our near economic future. What weโre now seeing is a sudden realisation that a no deal Brexit is both a real and imminent possibility.
โWith optimism at levels last seen when we just avoided double dip recession in 2012, UK businesses expect a zero-growth economy as the backdrop to their plans. This matters, because worried businesses donโt hire or invest, creating the conditions for a marked downturn.โ
He added: โLooking on the bright side, most businesses are not unhappy with current trading. If the fear of no deal can be lifted, we should hope for a quick return of confidence, and perhaps even a โno-deal avertedโ bounce in the economy. Letโs hope our politicians can deliver this.โ