17 January 2017

ACCA: UK business confidence drops to second lowest level since 2011

The uncertainty was caused by:

• Government investment falling to its lowest level since the start of 2016, with many developed markets still firmly in austerity mode

• Changes in the political landscape stemming from the recent US election

• Uncertainty over US / China trade developments 

• Concerns over Brexit as well as forthcoming European Elections - 55% of respondents view Brexit as more of risk than opportunity

The survey of over 4,500 finance professionals and business leaders worldwide has found that while the economic outlook has improved slightly in the US and China over the last quarter, the UK has hit its second lowest confidence levels since 2011. 

Almost half (44%) of global respondents expressed concern over falling income due to low levels of government expenditure, with another 43 per cent reporting worsening business confidence.

Across the Eurozone the resignation of Italian Prime Minister Matteo Renzi in December 2016, combined with a series of upcoming national elections, has led to a downbeat mood while UK business confidence fell sharply ahead of Brexit negotiations. [...]

Faye Chua says that the ‘Brexit effect’ is impacting on confidence levels,

“Confidence in the UK has also slumped to the lowest level in six years, with over half of respondents (55%) seeing Brexit as more of a risk than an opportunity. Capital, employment and investment indexes also fell, possibly because firms are delaying decisions until the political and economic picture around Brexit becomes clearer.

While retail spending has remained robust, and the fall in Sterling has boosted exports, it is likely that economic growth will slow in 2017 as a result of the ‘Brexit effect’ on confidence. [...]

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