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Business confidence declines, but remains in positive territory

Optimism among UK businesses falls in first quarter of 2016, Grant Thornton survey finds

OPTIMISM among UK businesses fell faster than any EU member state in the first quarter of the year, according to accountants Grant Thornton.

The quarterly global survey of 2,500 businesses in 36 economies found that UK business confidence fell to net 44% but remains well above the global quarterly average. Similarly, the UK remains one of Europe’s most optimistic economies, with the EU average standing at net 34%.

In the UK, the report identified a drop in revenue and profitability expectations, exports and employment expectations are underpinning the decline in confidence over the year ahead. Consequently, fewer companies are planning to invest in new buildings and plants and machinery over the year ahead.

The number of companies expressing worries over a shortage of orders and shortage of finance also increased, as more businesses pointed to economic uncertainty as a constraint for growth over the year ahead.

Robert Hannah, chief operating officer at Grant Thornton, commented: “While British business confidence may have dropped significantly since the beginning of the year, the UK remains one of the more confident markets internationally.

“Businesses feel caught in a tangled web of pressures, with a potent combination of fragile financial markets, volatility in oil prices, concerns over terrorist attacks and regional issues including the prospect of a Brexit and the US presidential race all adding to the uncertainty in their global economic outlook. Naturally, these issues in isolation can be more readily mitigated against; but in a globalised business context, their interplay has begun to rattle nerves.”

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