UK business confidence continues to fall following the vote for Brexit, and is now at its lowest in over three years, according to the latest Business Trends Report by advisers BDO.
Business output, reflecting companies’ experience of orders for the three months ahead, now sits slightly lower on the previous month at 98.2, down from 99.0. At the same time business optimism, which predicts growth six months ahead, has fallen from 98.9 to 97.9.
The current readings are still some way above the 95 mark which would signal a possible recession , and the latest falls are not yet as dramatic as may have been predicted., BDO says. “This suggests that the initial impact of the Brexit vote has been less severe than expected.”
But the picture is much gloomier for UK manufacturing as the sector’s optimism sub-index dropped to a four-year low, down to 81.
The falling value of sterling offers some hope for UK manufacturers, but rising inflation will push up costs.
BDO’s inflation index rose from 97.9 to 99.9 and this is set to rise further in the coming months following the drop in interest rates.
Peter Hemington, partner at BDO, said: “Brexit has compounded the continuing slowdown of the UK economy ....the Bank of England’s decision to lower interest rates is a step in the right direction."
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