UK businesses more optimistic for 2018 after December’s Brexit trade talks, finds report

Business optimism has picked up, likely bolstered by the news that the Government is making progress in its Brexit negotiations

Theresa May’s will be boosted by the fillip she has secured for UK trade (Getty)

A major breakthrough in Brexit negotiations scored at the end of last year is likely to have bolstered confidence across the UK’s business community, a new report suggests.

Accountant and business advisor BDO said on Monday that its monthly Optimism Index, which measures how firms expect their order books to develop over the next six months, increased from 102.05 in November to 102.15 in December.

The rise in business optimism is also being reflected in the jobs market, BDO said.

The company’s Employment Index, which indicates firms’ hiring intentions, rose by 0.2 points to 111.26 in December.

Despite the positive outlook for 2018, the Output Index, which measures how much companies produce across the manufacturing and services sector, fell from 98.99 in November to 98.45 in December, the lowest reading in almost two years. Business output growth has now fallen for five consecutive months.

BDO said that the UK’s falling output growth is being driven by the slowdown of the dominant services sector, which has been weighed down by Brexit uncertainty.

A breakthrough deal between Britain and the EU on Brexit was reached in December after months of stalled negotiations, paving the way for future trade talks.

Peter Hemington, partner at BDO, said UK business leaders were now more confident about the year ahead and were bolstering their recruitment efforts as a result.

“However, despite unprecedented levels of employment, business output continues to slow,” he said.

“While the Government prioritises securing our future outside of the EU, it must not overlook the immediate challenges stifling the growth of our economy. The perennial productivity problem must be addressed by accelerating investment in infrastructure and training before we fall further behind our G7 counterparts,” he added.

BDO’s data is based on a weighted average of the UK’s main business surveys from the Confederation of British Industry, the Bank of England and IHS Markit.