UK business optimism has hit its lowest level since the snap General Election in 2017, as companies grow increasingly concerned over a lack of progress with the Brexit negotiations.
The drop, which landed hardest in the services industry, comes after the sector contracted for the first time in eight years.
For the second month in a row, research by accountants BDO also showed a fall in confidence – which measures how companies expect output to develop of the next three to six months – in the manufacturing sector, despite a rise in output.
BDO said the decline was “indicative of the lack of political progress made on key economic issues, most notably the UK’s trading arrangements, as Brexit negotiations reach a critical phase”. It also pointed to factors such as declining economic outlook across Europe, Britain’s biggest export market.
Peter Hemington, a partner at BDO, said: “After more than two years since the UK voted to leave the EU, the lack of progress on what our future trading relationships will look like is now undermining business confidence and testing companies’ resilience.”
He added: “With the services sector accounting for more than 80% of UK GDP, the government must do more to reassure businesses that it will protect Britain’s 26 million services sector workers as Brexit negotiations take place, particularly considering the UK has the highest share of services exports than any leading economy.”