Raymond Doherty 4 Feb 2019 08:35am

Confidence slumps as businesses use “guesswork”, says ICAEW

UK business confidence is plummeting as the Brexit “roulette wheel continues to spin” and the “stakes could not be higher”, says Michael Izza ICAEW chief executive

This continued uncertainty and rapidly changing news on Brexit, along with other global economic worries, has meant UK business confidence continued to slump this quarter.

According to ICAEW’s Business Confidence Monitor, it dropped from -12.3 in Q4 2018 to -16.4 this quarter. Every sector currently stands in negative territory apart from IT and communications, with property and retail bottom of the pile.

ICAEW predicts a weak first quarter of GDP growth at just 0.1%. Meanwhile profits have grown only 2.6% year-on-year compared to a high of 5.3% four years ago.

The gloomy outlook is spread across the UK, with negative confidence levels in every region. The lowest were London, the West Midlands and East of England.

Izza said, “Companies at the moment are unclear about the future. Directors have the exceptionally difficult task of explaining within their annual reports the impact Brexit might have on their business models and operations.

“Companies are making decisions now about jobs, supply chains, headquarters and asset locations- incurring significant, and possibly unnecessary, cost and upheaval.

“We fear the destructive effects of a ‘no deal’ outcome on the economy so urge our politicians to work together to break the Brexit deadlock and help restore business confidence. Otherwise we can expect slow growth in 2019, with businesses unable to rely on consumers or exports to help expansion - hitting jobs and impacting on public services,” added Izza.

With just over 50 days until the UK is set to leave the EU and with no deal seemingly close, KPMG said last week that its clients are “praying” for an Article 50 extension.