Business confidence has been dragged to a four-year low amid rising concerns over economic uncertainty and a slowdown in demand following the EU referendum result.
Expectations that sales, orders and profits will grow over the next six months slipped to 12 per cent, down from 38 per cent in January, according to Lloyds Bank’s Business in Britain report.
More than a quarter of companies cited economic uncertainty as the main threat to growth over the next six months, while 18 per cent said the biggest danger came from a drop in demand.
The outlook for demand, employment and investment has weakened across all sectors, the report said. However, services saw one of the biggest slides in confidence, falling by an average of 30 points in retail and wholesale, hospitality and leisure, and business and other services.
Tim Hinton, managing director of mid markets and SME banking at Lloyds, said the blow to confidence since January’s report should viewed in the context of recent economic and political shocks.
“The EU referendum vote has introduced a level of uncertainty for companies as the UK decides on the best model for its future relationship with the EU, and this is likely to continue for the foreseeable future,” he said.
“Whilst sentiment has fallen to a four-year low, it remains well above the lows reached during the global financial crisis of 2008-09.”
The report, which gathers the views of about 1,500 businesses, said expectations for an exports boost have also waned, with hopes of a total rise in global export sales dropping 15 points to 20 per cent.
The plunge in the value of the pound to 31-year lows following Britain’s vote to leave the EU has made UK goods more competitive on the global market, helping exports to grow.
Employment also remained under pressure, with the number of firms expecting to recruit more staff over the next six months dropping for the fourth consecutive survey.
The study said the net balance of companies looking increase headcount over the period fell by 14 points to minus 1 per cent, while those looking to up their capital expenditure was down 14 per cent to zero.