UK business confidence drops to lowest since financial crisis

BUSINESS confidence in Britain has sunk to its lowest level since the global financial crisis, according to a survey of accountants, amid persistently high inflation and fears that the country is already in a recession.

The Institute of Chartered Accountants in England and Wales said on Thursday (Jan 26) that its latest monitor of business sentiment dropped to an index reading of minus 23.4, the weakest since 2009. The last survey, published in November 2022, stood at minus 16.9.

Companies in the retail, property and manufacturing sectors were particularly downbeat, and reported problems accessing capital, the group said. Construction firms had the lowest confidence.

Suren Thiru, the group’s economics director, blamed “the lethal combination of sky-high inflation and deteriorating customer demand”, and warned that “2023 is likely to be a bleak year for the economy as record inflation, rising taxes and interest rates push the UK into recession”.

The survey included 1,000 chartered accountants and was conducted between Oct 17 and Dec 16 last year.

Its findings were echoed by a separate survey, also published on Thursday, which found morale plummeting among small firms. The Federation of Small Businesses’ (FSB) confidence index dropped to minus 46 points in the fourth quarter of 2022, from minus 36 in the third quarter.

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The FSB said the index is now almost as low as during the UK’s second Covid lockdown. Its survey began in 2014. It added that retail businesses were among the most pessimistic, along with hospitality firms, including pubs and restaurants. More than 1,000 small firms were surveyed between Dec 7 and Dec 23 last year for the index. BLOOMBERG