A new research says business optimism has hit its lowest level since May 2017, when Prime Minister Theresa May announced a snap general election. The decline comes as prime questions on the UK's trading relationship with the EU after Brexit remain unanswered and the government ramps up preparations for no deal.
BDO's Optimism Index, which shows how businesses expect output to develop in the next three to six months, declined by 0.43 points in August to stand at 101.93. However, output increased marginally from July's eight-year low. Optimism in the UK's service sector, which accounts for approximately 80 per cent GDP, fell to its lowest level since March 2017. Output rebounded slightly in August to 97.17, but remains a 3.12 points beneath the figure for this time last year. Optimism in manufacturing has fared better, rising from 100.16 in July to 102.06 in August.
Partner at BDO, Peter Hemington said lack of progress on a trade deal with the EU was now testing companies' resilience. He said, “With the services sector accounting for more than 80 per cent 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.”
