A new survey has shown that businesses have never been as pessimistic about the UK economy as they have been at any point since the June 2016 EU referendum. Lloyds found that optimism among British firms slumped 5 points in September to minus 10 per cent. Its poll subtracts the percentage of firms that have a negative view from the percentage that have a positive view to come to a net score.
Firms’ concerns about the expected impact of Brexit intensified, to produce a deeply negative reading of -25 per cent. However, businesses are more positive about their own prospects, with optimism about trading for the year ahead rising 5 points to 13 per cent.
Hann-Ju Ho, senior economist at Lloyds Bank Commercial Banking, said: “While overall business confidence this month has remained broadly steady, optimism in the economy has fallen, and both remain significantly below the same period last year and the historic average. This month we are also seeing firms’ concerns about leaving the EU intensify against the backdrop of ongoing economic uncertainty.”
The East Midlands was most optimistic about the UK economy, followed by the West Midlands and Yorkshire & the Humber, while Scotland and Northern Ireland were the least confident, followed by the South West and London. Firms in the manufacturing and service sectors reported the weakest overall business confidence and the highest level of concern about the impact of the UK leaving the EU.
The negativity found by Lloyds was mirrored in a warning by business lobby the CBI that businesses are “beyond disillusioned” with the political brinkmanship and impending risk of a no-deal Brexit. Firms “cannot be protected” from the worst impacts of a no-deal Brexit, said Josh Hardie, deputy director general of the CBI, as the Conservatives gathered for a party conference set to be dominated by the UK’s departure from the EU.
His comments came after the government’s no-deal planning chief Michael Gove claimed that the automotive and retail sectors are ready for the UK to leave without an agreement with Brussels – claims their industry bodies promptly rejected. Hardie warned that a no-deal exit would leave the UK “mired in a swamp”, facing protracted negotiations with Brussels on trading arrangements.
He said: “There can be no room for complacency in no-deal planning – which goes for government and business alike. But while firms can be prepared, they cannot be protected against the worst effects a no-deal exit would bring.” He added that preparations “are already having an effect”.
