Stay up to date with notifications from The Independent

Notifications can be managed in browser preferences.

Pessimism doubles among UK businesses after Brexit, Cebr says

A fall in confidence could lead to a drop in investment and hiring freezes, the survey suggested

Zlata Rodionova
Tuesday 05 July 2016 12:22 BST
Comments
The survey found that organisations were more pessimistic about their business prospects
The survey found that organisations were more pessimistic about their business prospects

Pessimism among UK businesses rose after UK has voted to leave the EU, a survey has found.

The number of businesses that reported feeling pessimistic about the economic outlook for the next year spiked to 49 per cent in the week following the referendum from 25 per cent before, according to data published by YouGov and the Centre for Economic and Business Research (Cebr).

A fall in confidence could lead to a drop in investment and hiring freezes, the survey suggested.

Scott Corfe, director at Cebr, said the figures suggest a significant shock reaction to the Brexit vote.

“Not only are businesses feeling much more pessimistic in general about the state of the economy, but their own expectations for domestic sales, export and investments over the next 12 months have gone off a cliff,” Corfe said.

The index tracking expectations for domestic sales fell by almost 14 points in a week from 118.8 to 104.9, according to the research.

Hopes for exports also declined by 15 points from 115.3 to 99.8 and investment dropped off by almost eight points from 108.0 in the week before the referendum to 100.1 in the following week. A figure below 100 indicates contraction while a number above suggests growth.

The survey found that organisations were more pessimistic about their business prospects, with 26 per cent of the 1,000 UK based companies surveyed expressing concern after the vote, compared to 16 per cent ahead of the referendum.

The news comes as the pound dropped more than 1.2 per cent back to the $1.31222 on Tuesday, the same level it hit on the day following the referendum vote, its weakest level against the dollar in more than 31 years.

The pound is also sliding against the euro, down 1.1 per cent at €1.1783 at 10am on Tuesday.

The Bank of England has said it was likely to cut interest rates to fight off the slowdown following the Brexit vote.

Mark Carney, the Bank’s Governor also suggested that a move to lower the cost of borrowing could come as early as July.

The drop in business confidence also comes a week after another survey by YouGov and Cebr saw UK consumer confidence collapsing in the wake of the Brexit vote.

The Consumer Confidence Index, which measures people’s economic sentiment, fell from 111.9 to 104.3 in the week after the referendum.

Stephen Harmston, head of YouGov reports, said if last week we saw consumer confidence drop off as a result of the Brexit vote and this week we can clearly see the impact of the referendum result on businesses.

“As with consumers, a large part of this comes down to the sense that no one has a plan, no one knows what is going on, and no one really knows what happens next. What all the players in the economy are searching for at the moment is certainty. The Bank of England has reassured the markets to an extent but businesses and consumers now need to feel the same,” Harmston said

Join our commenting forum

Join thought-provoking conversations, follow other Independent readers and see their replies

Comments

Thank you for registering

Please refresh the page or navigate to another page on the site to be automatically logged inPlease refresh your browser to be logged in