Business confidence has fallen back into negative territory, reversing the gains made in Q2 2017, according to the latest ICAEW Business Confidence Monitor (BCM).
A snap general election, the hung parliament and the hesitant progress of negotiations with the EU has meant British businesses are now adopting a more cautious, wait-and-see approach.
Key findings for Q3 2017:
- The Business Confidence Index is now back in negative territory, falling from 6.7 in Q2 to -8 in Q3, similar levels to the first quarter of 2017
- GDP growth for the third quarter is forecast at 0.2 per cent, after 0.3 per cent in the second quarter
- Input prices continue to rise at 2.5 per cent year-on year
- Household incomes will continue to be squeezed as businesses seek to control overall cost rises by holding wage growth to a rate below inflation
- The depreciation in the value of Sterling hasn’t led to faster growth in exports
- Businesses are not investing at the level needed to generate faster UK economic growth. Expectations are for investment growth to remain well below the rates of 2014 & 2015
- A shortage of non-management skills is a growing concern by a record-equalling number of businesses whilst investment in staff training remains weak
Mathew Rideout, ICAEW Director of Business said: “The fall back into negative territory is not unexpected. Since the announcement of the general election, a vacuum has been left with Government’s attention swallowed by a hung parliament and the start of EU negotiations. The industrial strategy has been lost in the void, coupled with no clear signal towards post-Brexit policy. As a result, businesses cannot see through this haze of uncertainty and are struggling to look further than the end of the next quarter in terms of their decision making.”