Joint-Record Low Business Confidence In The UK – Yet It’s Still The Highest In Europe

[Liz Seyi]

In a sign, perhaps, of just how perilous the economic situation remains for the whole of Europe in 2022, it has been reported that UK business confidence declined to a record low in June but still managed to be the highest on the continent in addition to being above the global trend.
That apparently somewhat contradictory state of affairs was set out by a business outlook survey reported on by Business Leader.
The magazine stated in the UK, there was a net balance of 28% more private-sector businesses predicting that their activity levels would go up over the course of the next year. This is a long way short of the +56% reading for February and the joint-lowest since this particular survey began to be carried out in 2009.
However, it’s still a healthier reading than the +16% EU average, as well as the +22% global average.
Inflation driving up costs continues to be a big worry for UK businesses
With inflation continuing its recent steep rise in the UK – largely due to heightened energy costs – UK firms responding to the poll suggested that they expected profit margins to be pushed down as a result. In fact, the most recent edition of the survey was the first to record a negative reading for profit forecasts of -2%.
It is clear from the data that firms are worried about their ability to pass on increased costs to customers. +59% of businesses anticipate that their output charges will go up, which is the second-highest score on record for this survey, behind only the +62% that was seen in February.
Much has also been said in recent times about businesses having to pay more for staff, and there wasn’t much change in this regard in the latest edition of the index. +80% of the businesses questioned predicted higher employee wages, which was only slightly lower than the +83% previously recorded.
What about the challenges surrounding those famously constrained supply chains in recent times? Well, there was hope for manufacturers in this regard in the latest survey results, as their expectations for non-staff costs were the lowest they had been in 12 months.
On a sector-by-sector basis, producers of electrical and transport goods exhibited the greatest level of optimism, at +63%, on the grounds of such factors as new product opportunities, sustainable investment, and reduced metal prices.
Hospitality firms, though, suffered from the effects of the cost-of-living crisis making consumers more cautious about spending on travel, dining, and leisure. It perhaps shouldn’t be too surprising, then, that businesses in this sector gave a -4% confidence verdict, with this being the first negative outlook posted by hospitality businesses for almost four years.
Is your business well-placed to weather constant and unpredictable change?
We are in curious times indeed for ‘UK plc’, as demonstrated by data like the above. The chances are that you will feel uncertain as to what conditions you are likely to be conducting business in, even in six months or a year’s time – and of course, the political uncertainty brought by the ongoing Conservative Party leadership contest is unlikely to have helped with that.
So, why not set in place solid foundations of support for your business by joining forces with one of the leading accounting and payroll companies in Plymouth, Wellington, and Newton Abbot? Enquire with our team at TS Partners today, and we will be pleased to assist with your particular needs.