British business expansion plans are at their weakest in more than three years, according to a survey by the Confederation of British Industry.
The CBI quarterly report, the first since the June vote to leave the European Union, also found that optimism in business and professional services fell at the fastest pace since November 2011.
In consumer services, optimism dropped at its fastest since the financial crisis — February 2009.
Anna Leach, the CBI’s head of economic analysis and surveys, said: “To shore up confidence across the economy, the Government must clearly communicate plans for negotiations to leave the EU, and demonstrate its commitment to stimulating growth and driving investment with an ambitious Autumn Statement.”
Here are the key figures from the survey:
- Around 10% of services businesses surveyed said they were more optimistic than three months ago, with 40% saying they were less optimistic giving a net reading of -30%, the lowest since November 2011.
- 39% of firms said they expected to expand their business, and 60% said they did not, giving a balance of -21%, the lowest since May 2012.
- Businesses citing uncertainty about demand/sales as a factor limiting capital expenditure (66%) is at the highest since May 2013 (69%).In consumer services, optimism fell sharply at -37%, which is the fastest decline since February 2009’s -53%.
- Employment was still robust and growth in numbers employed was the strongest seen in 2016 so far. 33% of businesses said numbers employed were up on three months ago, and 5% said they were down, giving a rounded balance of +29%.
Lack of clarity over Britain’s future trading relationships with the European Union is hitting confidence.
Last week, analysts at Bank of America Merrill Lynch, led by UK economist Robert Wood, said that while day-to-day spending shows no sign of slowing down, people are more cautious bigger purchases, such as houses and cars.
Moody’s also said last week that: “Uncertainty around the future of the economy outside the common market will continue to dampen business investment and consumer spending, as businesses hold back on hiring and making long-term investments, and as consumers postpone large spending decisions.”
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