The mood music in the City has changed -- yet another sign the UK is hitting a slowdown

Confidence among Britain’s biggest companies is at its lowest since 2012, with only 13% of those surveyed anticipating an improvement in the UK economy in the next 12 months, according to research by the Institute of Chartered Secretaries and Administrators (ICSA).

Its bi-annual “Boardroom Bellweather” survey of FTSE 350 companies found that “boards were in a pessimistic mood about the economy” and “frustrated about the tide of the regulation and legislation.”

The 13% figure is down from 74% almost a year ago. Only 16% of respondents expected any improvement in the global economy, compared to 28% of those asked in December 2015.

While much of the debate surrounding the British economy right now centres on Brexit, only 43% of respondents saw Britain leaving the EU as potentially damaging to their business, with only 49% of boards saying they have considered the ramifications of Brexit.

Only 37% of boards said they regarded EU membership as being positive for their companies — down from 61% in December 2015 — though this decline was less apparent in the top 100 FTSE corporations.

Meanwhile, governance remains a big issue for most UK firms, with “over-regulation and compliance for compliance’s sake” big bugbears. Two-thirds of boards considered themselves to be “diverse,” though only 28% viewed the number of females on their boards as “sufficient.”

Peter Swabey, Policy and Research Director at ICSA said the downbeat mood in the economy was reflected in low investment:

“Declining business confidence linked to slowing economic growth is reflected in the 45% of respondents declaring no change in plans for capital expenditure in the next twelve months. It will be interesting to see whether this situation changes once uncertainty about Brexit has been removed.

“It is encouraging to see an increase in the number of companies addressing culture and behaviour, particularly on the board. However, answers to our question about building public trust were disappointing, revealing a rather formulaic approach and a lack of innovative thought.”

There have been a number of indicators of an economic slowdown in recent weeks, with the Office of National Statistics reporting a 3.6% slowdown in construction in March — the worst performance in the building sector for almost four years.

The survey results come as the UK government said on the weekend that a Brexit would lead the UK to another recession. Polls suggest the race between the Leave and Remain campaigns is neck and neck.

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