Business confidence drops amid economic uncertainty
Business confidence fell in the last quarter, driven by political and economic uncertainty, according to a new business tracker.
The ICAEW Business Confidence Monitor dropped to ‐0.2 for the quarter – dipping into negative territory after three successive quarterly increases.
This reflects the fragile nature of numerous sectors in the UK, especially as the retail sector continues to see high‐profile insolvencies and rescue attempts.
Subdued GDP growth is forecast on the back of this drop of confidence, with growth expected to be as low as 0.4% and 0.3% in the second and third quarters respectively.
The study revealed that firms are taking action to control their outgoings by cutting budgets for staff development, managing salaries more effectively and by capping investment.
Regulatory requirements continue to be a challenge however, as 58% of businesses – the highest proportion since the survey began – cite them as an issue.
ICAEW has called for government action to tackle falling confidence, suggesting that reducing red tape could free up businesses to focus on other aspects of their operations.
They suggest that the implementation of digital practices and other regulation could dent confidence even further, potentially limiting growth.
Legislation including Gender Pay Gap and General Data Protection Regulation were among the new requirements that businesses cited as a growing challenge.
When compared to 12 months ago, 15% more businesses view regulation as their major challenge, ahead of rising completion and dwindling consumer demand.
The confidence tracker also reveals that exports are outpacing domestic sales in the UK, although operational costs are also spiralling upwards.
As a result businesses are limiting their salaries and are carefully managing their finances in order to maintain a balanced cash flow.
However, should a business find itself in difficulty, a number of alternative finance options can provide a short‐ or long‐term solution.
Refinancing can be hugely important for small businesses, especially when it comes to managing debts and sourcing finance for growth.
By Phil Smith