Brexit: Business confidence slumps to lowest level since last year, reveals survey

Optimism specifically about the economy declined to its lowest level since June 2016 and its second lowest level since 2012

The pound is currently lingering near its lowest level in around eight years against the euro (Getty)

Businesses are feeling less confident about the economy and their own trading prospects than they have at any point during the last year, new research reveals.

A monthly survey compiled by Lloyds Bank shows that overall business confidence among 200 companies with a turnover of at least £1m, fell by 13 percentage points in August to its lowest level since August 2016.

The share of firms reporting higher business confidence decreased by 7 points to 38 per cent, while those reporting lower confidence increased by 6 points to 21 per cent.

Optimism about the economy declined by 12 points from 17 per cent to 5 per cent, which represented the lowest level since June 2016 and the second lowest level since 2012.

Lloyds said that the share of firms citing greater economic optimism fell by 5 points to 33 per cent, while the proportion reporting lower economic optimism rose by 7 points to 28 per cent.

The survey underscores a general trend across businesses that has emerged in recent months, as Brexit uncertainty continues to dampen optimism and a fall in the pound leading to a jump in inflation eats into margins.

The pound is currently lingering near its lowest level in around eight years against the euro, making it more expensive for companies that generate revenues in the UK to import goods from the trading bloc.

Overall, Thursday’s survey showed that the net balance of firms saying that their business prospects had improved decreased by 14 points to 29 per cent in August. And although 43 per cent reported stronger business prospects, that number represented an 8 percentage point fall from July. Those reporting weaker prospects rose by 6 points to 14 per cent.

The consumer services sector was particularly downbeat, with sentiment there falling to a 14-month low. Sentiment in the industrial sector – which includes manufacturing and construction— fell to a three-month low.

Despite the gloom, however, the survey also found that the net balance of firms planning to increase their headcount over the coming year remained positive, increasing by 2 percentage points to 27 per cent.

The share of firms expecting to hire more people remained the same at 33 per cent, but only 6 per cent said that they expect to reduce staffing levels which is down by 2 points from July.

The survey was conducted between 14 and 18 August with responses from all sectors and all regions of Great Britain.