UK business confidence returns to pre-Brexit levels

John Hewitt Jones

October 7, 2016

UK business confidence returned to pre-referendum levels during September, according to the latest YouGov/CEBR index.

Business confidence rose to 112.4 points last month, putting it at around the levels it was ahead of the vote to leave the EU. In June it was at 112.6 and in May it stood at 112.5.

Interviews with 500 business leaders shows the greatest increase in business confidence came from greater optimism about the UK economy over the next 12 months.

There was a nine percentage point increase in the number of businesses that are optimistic about the UK economy over the coming year (up to 44% in September from 35% in August). Meanwhile, there has been a ten percentage point decrease in the number of businesses that are pessimistic about the country’s economy in the next 12 months.

Additionally, for the first time since the referendum, a majority of businesses feel positive about their own performance in the next year. In September, 53% of organisational decision makers were optimistic about their own company’s prospects over the coming 12 months, compared to 48% in August and 46% in July. In June, 53% were optimistic.

The strengthening of business confidence over the past month echoes a bounce-back in consumer confidence over the same period.

Scott Corfe, director at the Centre for Economics and Business Research, said: “It is now clear that business confidence took a short-term stumble in the wake of the EU vote instead of a long-term fall. The panic that gripped businesses in the aftermath of the referendum has subsided and they are now much more level-headed and optimistic about the future of both their own organisations and the UK’s economy in general.”

“Not only has optimism grown but our figures also show that pessimism has decreased, although it is still above pre-referendum levels, indicating the Brexit vote has left longer-lasting scars on some businesses.”

“However, it should be noted that this research was carried out before the Conservative Party conference and all the talk of ‘hard Brexit’ implying that the UK would prioritise immigration restrictions over access to the European single market. Once the shape of our economic relationship with the EU becomes clearer, these figures could shift notably.”

Stephen Harmston, head of YouGov Reports, said: “The resounding return of business confidence in the UK echoes the progress made among consumers over the past few months. While both suffered a wobble immediately after the vote, both consumers and organisations have realised that very little has actually changed yet and are now treating things as ‘businesses as usual.’

“We won’t know until next month what impact speculation about whether the government is planning a ‘hard’ and ‘soft’ Brexit will have on business confidence. We will have to wait to see whether the rebound in confidence is itself hard and resilient to such talk or whether it is soft and causes another spasm of panic among organisations. Whichever it is, these figures could well represent the end of the pre-Brexit honeymoon period.”

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