Business Confidence Lowest in 5 Years – BDO Report

Business ⁣confidence has fallen to its lowest level in nearly five years as‍ firms brace for a​ recession, according to ⁢the latest BDO Business⁤ confidence Index.

The index, ⁤which⁢ surveys ​500 UK business ⁢leaders, fell to ⁢81.9 in October, down from 88.5 ‍in September.​ This ⁢is the lowest reading since November 2018.

The⁣ fall in confidence was driven by a sharp decline⁢ in optimism about the UK economy, which ​fell to -24.8, its lowest level since the depths of the pandemic. ‌Optimism about firms’ own prospects also fell, but to a lesser extent.

BDO‍ said the fall in confidence was likely due to a number of​ factors, including rising interest‌ rates, high⁢ inflation, and the ongoing war in Ukraine.

“Businesses are facing a perfect storm of headwinds,” said Kaleyra ⁣Patel, head of ⁤economic advisory at BDO. “rising interest rates are squeezing margins,high ⁣inflation⁤ is eroding consumer ⁤spending,and the war‍ in ‌Ukraine is creating uncertainty.”

The ⁣index also‍ showed that⁣ firms are cutting back‌ on investment and hiring plans. The proportion⁤ of firms planning to invest in new​ equipment fell to 28 per cent, down from ⁤35 per cent in September. ⁤The ‌proportion of ‌firms planning to hire more staff also fell, to 24⁣ per cent, down​ from ⁣30 per cent.

“Businesses are understandably becoming‍ more ⁤cautious,” ⁣said Patel. ​”They are delaying investment and‌ hiring plans in anticipation ‌of⁢ a slowdown‌ in the economy.”

The BDO Business⁢ Confidence Index is a leading ⁤indicator of economic activity. A fall in the index suggests that the UK‌ economy is likely to slow down in​ the coming months.

The latest data ‌comes after the ‍Office for national Statistics (ONS) revealed that the UK economy unexpectedly flatlined

Business confidence fell to its lowest level in nearly⁣ five years, ⁣an advisory company‌ indicated, as the Labour government ⁣is expected ⁣to oversee a‍ small enhancement in⁣ the UK economy this year.

BDOS optimism​ index, which tracks sentiment by surveying 4,000 ⁣executives, dropped to its weakest reading since January 2021 at⁣ the end of ​last year due to low demand from ‍consumers and worries over employment levels.

Researchers ⁣at the ‍firm ‌said the⁣ decline in confidence took place⁤ across both the services and manufacturing sectors, pointing to bosses’ worries about battling against complex regulation and a heavy ‌tax load.

By contrast, ​ BDO’s output index rose slightly ⁤as companies recorded more ⁢new orders, though the manufacturing sector was still set to contract.

Scott Knight, head of growth at the firm, said ⁣the latest figures showed confidence was “on the floor”.

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