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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