Business confidence remains in negative territory amid uncertainty

The ICAEW’s Business Confidence Monitor (BCM) 2017 Q1 results found that business confidence remains in negative territory at -8.7.

The Q1 results record a slight increase on the 2016 Q4 index of -9.8.

The ICAEW said business uncertainty has led to low confidence and that even though companies are forecasting “stronger growth in both domestic and export sales than in recent quarters”, this is not expected to lead to faster growth in profits, as input costs are rising.

Stephen Ibbotson, ICAEW director of business said: “It’s encouraging that business confidence hasn’t dropped further into negative territory following a difficult 2016. Inflation continues to rise and commodity prices are increasing more rapidly than before, so we expect costs to climb faster still. Firms will try to pass many of these increases on to their customers, which means that 2017 is likely to be a year of counting the pounds and pennies for consumers following an unsustainable spending spree towards the end of last year.”

The Q1 results also found that the retail and wholesalers, and property sectors experienced the largest decline in confidence following a difficult festive period. The collapse in house prices remains a concern, with businesses passing cost increases onto customers.

Uncertainty has also affected employment growth, which is expected to slow over the next year while Brexit plans develop. Capital investment is also expected to slow significantly in 2017, with the Q1 findings reporting its slowest growth in three years.

“In order for businesses to start the New Year off confidently, the Government should resolve the ‘Hard Brexit vs Soft Brexit’ debate in Parliament as quickly as possible and negotiate the most inclusive Brexit deal for business of all shapes and sizes across the UK,” added Ibbotson.