You are here
British businesses losing faith in economy as Brexit approaches
[LONDON] British businesses are getting increasingly gloomy about the economy as Brexit approaches, according to the Lloyds Business Barometer.
A measure of optimism in September fell to its lowest since the immediate aftermath of the 2016 referendum, and concerns about Brexit intensified. A negative impact from Britain's departure from the European Union (EU) is expected by 43 per cent of businesses now, up from 39 per cent a month earlier.
The survey of 1,200 companies took place the month before Britain's potential departure from the EU, set for Oct 31. Prime Minister Boris Johnson has pledged to quit the bloc on that date with or without a deal, and the chaos in British politics points to the latter option being a distinct possibility.
Economists including those at Barclays and Bloomberg Economics now have no deal as their base-case scenario, which would drag the UK economy into a recession and push inflation higher. Bank of England policymaker Michael Saunders said last week that even if the UK avoids a no-deal break, prolonged uncertainty could damage the economy enough to require rate cuts in response.
The least-confident firms were in Scotland, Northern Ireland, the south-west of England and in London, Lloyds said. A gauge of firms' trading prospects for the next year improved, though it remained below the long-term average. Expected staffing levels also increased after a sharp drop in August.