UK business confidence dips to lowest tip since 2012: BDO

April 14, 2019 - United Kingdom

UK business optimism has crashed to its lowest level since September 2012, when the UK economy was battling to fight off a double-dip recession, says a new report from accountants and business advisors BDO LLP. BDO’s Optimism Index, which shows how businesses expect output to develop in three to six months, plummeted to 96.10 in March from 99.79 in February.

The report registers the worst monthly drop in the optimism index since November 2008, during the dark days after the fall of Lehman Brothers. In absolute terms, sentiment is now weaker than its previous low point after the UK’s vote to leave the European Union (EU) in 2016, according to a press release from BDO.

The services sector, which comprises around 80 per cent of the UK gross domestic product (GDP), drove the overall decline in confidence with the sector index falling by a dramatic 4.15 points to 95.13 in March.

Despite the plunge in optimism, BDO’s Output Index, which measures UK business output growth, held steady at 98.74 in March, up 0.42 from 98.32 in February.

This suggests the economy is performing better than expected given the challenges of the domestic political environment and the gloomy global business outlook, according to BDO.

While output growth is in positive territory, it remains below the average growth trend of 100 and is no doubt inflated due to well-documented stockpiling at an all-time high. (DS)