Danny McCance 2 Jan 2018 04:10pm

UK business confidence slumps despite global optimism

Global business optimism reaches its highest level in 25 years in Q4 but in the UK it slumped year-on-year due to Brexit uncertainty

Optimism in the UK was up by 3% on the previous quarter, however, it was still 14% lower than the same period the previous year, according to Grant Thornton’s International Business report.

Despite a record high for global business optimism, confidence in the UK saw a 61% drop from two years ago, as Brexit hit corporate confidence.

“UK businesses have effectively been kept in a holding pattern since the vote to leave the European Union in June 2016, with very few details over Brexit negotiations causing significant uncertainty since,” said Robert Hannah, chief operating officer of Grant Thornton UK.

However, he pointed to the last minute deal on the first phase of Brexit and more details of the government’s Industrial Strategy being released as cause for the slight uptick in optimism compared to Q3.

UK firms are showing an increasing appetite for exports, with 24% expecting to do more over the next 12 months, up from 15% the same period last year.

“To help further allay UK businesses concerns, the government’s focus should now be on agreeing a Brexit transition period which would provide certainty in the short term and remove the possibility of a cliff-edge Brexit in March 2019,” Hannah added.

If this is not decided by the end of the first quarter, Hannah feels more businesses “will start to implement no-deal contingency plans”.

In November, ICAEW’s latest Business Confidence Monitor found that profits were still up to 4.1% in Q4, a 0.75% increase on the previous quarter, despite weak confidence.