Not quite a year ago we posted on the topic of Business Confidence and Brexit. In the wake of a negative campaign from both sides, and the surprise referendum decision to leave the EU, business confidence was wobbling between positive (no apocalypse! The economy hasn’t gone into freefall!) and negative, when the true extent of negotiating our own trade deals became apparent (how many experienced negotiators do we need again?) A year on, following a general election that never needed to happen and the commencement of official Brexit negotiations, we thought it would a good time to revisit how optimistic company owners and managers are feeling about their businesses and the economy in general.
The first half of the year saw a definite boost in business confidence, increasing from -8.7 in Q1 to 6.7 in Q2. Projections expected GDP to rise slightly, with companies also expecting to see sales and profit growth. However it wasn’t all good news, with inflation expected to exceed wage growth, consumers could well be looking to rein in their spending, and a snap general election brought uncertainty back as the Conservative party watched their majority slip away.
Following the result of that general election, with the Tory majority eroded and a deal struck with the hardline Democratic Unionist Party, business confidence took a hit. The CBI (Confederation of British Industry) called it a ‘serious moment for the UK economy’ and urged the next government to prioritise the economy and focus on making it an ‘open and competitive’ one upon leaving the EU. A minority government operating within the confines of a confidence and supply deal with the DUP cannot bring the stability that businesses need to see. While there seems to be no immediate desire to elect a new Conservative leader, minority governments tend to stand on very shaky ground and rarely last more than a year in power.
Despite all this, there is some positive news when it comes to our current level of business confidence. The Institute of Chartered Accountants in England and Wales (ICAEW) has released its Business Confidence Monitor for Q2 of 2017 and, while wages are being held below inflation and some cost rises are expected to be passed onto consumers, overall levels of optimism are slowly rising. Whilst there is still instability in both our political and economic spheres, this slow growing optimism is surely one thing to feel positive about.