One third of UK companies say Brexit is negatively affecting their business, survey shows

Firms in the wholesale, hospitality and leisure, and public sectors were most concerned about leaving the EU, according to the findings

Almost a third of UK companies say Brexit is already having a negative effect on their business, as overall confidence dropped in August, according to the latest Lloyds Bank business barometer.

Business confidence fell this month by six points to 23 per cent, which Lloyds said was due to declines in trading prospects for the year ahead and economic optimism.

Hann-Ju Ho, senior economist for Lloyds Bank commercial banking, said: “Business confidence was resilient in the first half of the year, but has eased back recently. This reflects changes in perceptions of Brexit risks, which underscores the importance of current EU-UK negotiations.”

Confidence that Brexit would have a positive impact on business expectations fell to a net balance of -4 per cent, down from from 3 per cent in July, and its lowest level since December last year.

This was the main driver behind the overall downward turn, with 28 per cent of firms saying they thought that leaving the EU is having a positive impact on their business activity, down 3 points from 31 per cent in July, while 32 per cent said that it was having a negative effect (up 4 points from 28 per cent).

Brexit concerns were highest in the wholesale, hospitality & leisure and public sectors, Lloyds said.

According to the findings, confidence was highest in London and the West Midlands, both at 37 per cent, and the North West, at 35 per cent, but eight out of 12 regions saw overall confidence decline, most prominently in the South East.

Meanwhile, manufacturing firms remained most confident, with a score of 38 per cent, but the construction industry fell sharply by 12 points to 36 per cent.

Lloyds also found that companies are holding back on hiring new staff, while the proportion of firms anticipating pay rises also declined.

Sharon Geoghegan, managing director for SME banking at Lloyds, said: “Economic uncertainty is definitely driving firms to think twice before investing in their businesses, although the manufacturing sector seems to be the most resilient, compared to the services sector which seems to be less confident.”

Brexit uncertainty has seen the pound rally and then fall back again this week. Sterling was up against the dollar on Wednesday, after comments from EU and UK officials suggested that a deal was looking more likely.

However, the currency pared those gains on Thursday after the EU’s chief Brexit negotiator, Michel Barnier, said the EU was still preparing for a cliff edge Brexit.