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Business confidence since Johnson victory at highest since EU referendum

Confidence among UK business leaders soared after prime minister Boris Johnson’s re-election to its highest level since the EU referendum in 2016.

A poll by the Institute of Directors (IoD) recorded the sharpest upward swing in positive sentiment month-on-month since its records began three-and-half years ago.

Net confidence levels in the UK economy for the year ahead rocketed from a -18% reading in November to +21% in December.

Confidence levels in their own firms also leapt from 26% to 46% among the 952 directors surveyed in the IoD’s ‘Confidence Tracker’ index.

The number of directors who expected their organisations to increase investment in 2020 also ticked upwards.

Many firms have held back on investment as political instability and economic uncertainty have taken a heavy toll on the economy since the Brexit vote.

But Tej Parikh, the IoD’s chief economist, said the Conservatives’ decisive election victory after a period of political deadlock over Brexit had given many leaders “a little more festive cheer.”

“A firm majority government means that business leaders, whatever their personal views, now at least have a framework around which they can put in place plans to invest, hire, and expand,” he said.

Many business chiefs have also expressed their relief since polling day at avoiding a Labour government, amid fears over leader Jeremy Corbyn’s plans on tax, union rights, public spending, nationalisation, and business regulation.

Parikh welcomed “some exciting stocking-fillers” from the new Johnson administration, including promises on lower business rates, skills investment, and higher research and development support through tax credits.

“For the longer-term, ambitious proposals on broadband, infrastructure, and regional growth are music to the ears of many in the business community who want to finally see the dial shift on the UK’s lagging productivity growth,” he said.

But he said continued uncertainty over Britain’s longer-term future “remains a cause for concern.” Many in the business world fear Johnson’s pledge to abandon EU rules less than a year after Brexit leaves too little time to ensure a smooth transition and close trading relationship from 2021.

Parikh added: “Our members’ confidence has proven sensitive to Brexit developments over the past few years, and this is likely to continue during negotiations in the year ahead.”

Business chiefs surveyed raised Britain’s uncertain trading status with the EU as their second most pressing concern, behind current UK economic conditions.

Separate survey data in recent weeks has painted a bleak picture of the UK economy despite record high employment, with political uncertainty and a global economic slowdown hitting output in certain sectors.

By Tom Belger

Source: Yahoo Finance UK

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Region’s business confidence remains above UK average

Business confidence in the region slid three points in April but remains above the UK average, a new report released today reveals.

The latest Business Barometer from Lloyds Bank Commercial Banking shows that companies in Yorkshire reported higher confidence in their business prospects, up four points to 20 per cent, but lower economic optimism, which has fallen eight points to 17 per cent. Together, this gives an overall confidence of 18 per cent, compared with a UK average of 14 per cent.

Businesses’ hiring intentions show a net balance of eight per cent of businesses in the region expect to hire more staff during the next year, down seven points on last month.

Across the UK, overall confidence climbed four points as both firms’ optimism about the economy and their confidence in their own prospects continued to climb from lows recorded earlier this year.

Companies’ economic optimism rose to four per cent, while their confidence in their own business prospects climbed three points to 23 per cent.

The Business Barometer questions 1,200 businesses monthly and provides early signals about UK economic trends both regionally and nationwide.

Kelly Green, regional director for Yorkshire at Lloyds Bank Commercial Banking, said: “It’s very positive to see Yorkshire firms increasingly confident about their trading prospects, but perhaps surprising to see this isn’t reflected in their hiring intentions.

“By carefully managing working capital, firms can build their financial flexibility to increase staffing and take advantage of growth opportunities without harming day-to-day spending.

“We’ve pledged to lend up to £1.4bn to Yorkshire firms in 2019, including through working capital tools, to help firms make the most of the opportunities that come their way.”

Across the region, a net balance of two per cent of businesses said they felt the UK’s exit from the European Union is having a negative impact on their expectations for business activity.

By Rachel Covill

Source: The Business Desk

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Business confidence in UK hits lowest ebb since financial crisis

Business confidence has crashed to the lowest point since 2012, and the economy is only growing because firms are stockpiling ahead of Brexit, according to a key sentiment indicator.

The BDO optimism index, which charts how businesses expect output to develop in the next three to six months, fell faster in March that at any time since the bleakest days in the aftermath of the Lehman Brothers collapse in 2008.

The figures suggest that the UK economy could struggle to post any positive growth in 2019, BDO said.

The fall in confidence has been led by the previously robust services sector. “In absolute terms, sentiment is now weaker than its previous low point after the UK’s vote to leave the EU in 2016,” the BDO said.

“The services sector, which comprises around 80% of UK GDP, drove the overall decline in confidence with the sector index falling by a dramatic 4.15 points to 95.13 in March.”

BDO’s separate output index, which measures UK business output growth, reported a slight improvement, suggesting that the economy is performing better than expected given the challenges around Brexit and ongoing concerns about global trade.

Much of the growth in the economy is down to stockpiling, according to BDO, which it said was at an all-time high.

Peter Hemington of BDO said: “Continued uncertainty about Brexit has led to a severe worsening of expectations about our near economic future. What we’re now seeing is a sudden realisation that a no-deal Brexit is both a real and imminent possibility.

“With optimism at levels last seen when we just avoided double-dip recession in 2012, UK businesses expect a zero-growth economy as the backdrop to their plans. This matters, because worried businesses don’t hire or invest, creating the conditions for a marked downturn.”

But he added that if a cliff-edge Brexit is avoided, business could bounce back swiftly. “Looking on the bright side, most businesses are not unhappy with current trading. If the fear of no deal can be lifted, we should hope for a quick return of confidence, and perhaps even a “no-deal averted” bounce in the economy. Let’s hope our politicians can deliver this.”

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This week economists are braced for official UK output figures for February which are expected to show that the economy has slowed to a halt. Experts are forecasting that growth will fall to zero compared to an unexpectedly positive 0.5% in January.

At the weekend UK manufacturers urged the prime minister to revoke article 50 if she cannot secure a Brexit agreement this week.

In an open letter to Theresa May and Labour leader Jeremy Cobyn, trade body Make UK said a no-deal Brexit would be “disastrous for the majority of UK manufacturers and the livelihoods of the millions of people they employ and their families”.

By Patrick Collinson

Source: Yahoo Finance UK

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Business confidence surges in East Midlands

Business confidence in the East Midlands surged by 15 points in March, according to new figures.

Confidence grew to 18 per cent, making it the second most confident region in the UK, according to the latest Business Barometer report from Lloyds Bank Commercial Banking.

Companies in the region surveyed between 1 and 15 March 2019 reported higher levels of confidence in their own trading prospects, with a net balance of 29 per cent of firms expecting business activity to increase over the next 12 months, compared with 21 per cent last month.

Businesses economic optimism jumped 20 points to stand at seven per cent. When taken together, these two figures give an overall confidence of 18 per cent.

A growing number of companies are also looking to recruit new staff, with a net balance of 28 per cent planning to recruit over the next 12 months, compared with 10 per cent a month ago.

Across the UK, overall confidence climbed six points to 10 per cent as both firms’ optimism about the economy and confidence in their own prospects bounced back from February’s lows.

The Lloyds Bank Business Barometer questions 1,200 businesses monthly and provides early signals about UK economic trends both regionally and nationwide.

Amanda Dorel, regional director for the East Midlands at Lloyds Bank Commercial Banking, said: “This month’s Business Barometer shows that East Midlands businesses are among the most confident in the whole of the UK.

“This reflects what we’re seeing first hand in the region, where ambitious and driven firms are continuing to invest, innovate and expand.

“We’re by the side of businesses across the East Midlands, and as part of our commitment to helping them succeed, we’ve pledged to lend up to £2.5bn to East Midlands businesses during 2019.”

By Jon Robinson

Source: Insider Media