Business confidence is at its lowest in four years amid increasing economic uncertainty and weaker demand after Britain’s vote to leave the EU, according to a report.
The outlook for demand, employment and investment is weaker across all sectors of the economy, says research by Lloyds Bank.
The important services sector saw the biggest fall, down by an average 30 points across hospitality and leisure, retail and wholesale, business and other services, according to Lloyds’ Business in Britain report.
More than a quarter of companies said the main threat to growth in the next six months was economic uncertainty and a further 18% named the drop in demand as the biggest danger.
Expectations that sales, orders and profits will rise over the next two quarters fell to 12%, down from January’s 38%, and the number of firms expecting to take on more staff over the next six months has dropped for the fourth consecutive survey.
The number of companies looking to increase their capital expenditure was down by 14% to zero.
Among those feeling the pinch is Mitie Group, a FTSE 250 outsourcing company which announced a profit warning earlier on Monday, citing “significant economic pressures”.
The company said lower UK growth rates, changes to labour legislation and further public sector constraints and “uncertainty both pre and post the EU referendum” would contribute to its full-year operating profit being “materially below management’s previous expectations”.
Tim Hinton, managing director of mid markets and SME banking at Lloyds, said: “The EU referendum vote has introduced a level of uncertainty for companies as the UK decides on the best model for its future relationship with the EU and this is likely to continue for the foreseeable future.”
Lloyds’ report, which gathers the views of around 1,500 businesses, is not all bad news, however, with Mr Hinton saying that business confidence is still “well above the lows reached during the global financial crisis of 2008/9”.
Exports have also been helped by the pound falling to a 31-year low following the Brexit vote, making UK goods more competitive globally.