Research Suggests UK Economy Showed Signs of Slowing Before Brexit
Output fell in the run up to the referendum. Post-Brexit, business' hiring intentions are at a two-year low
The UK economy was already showing signs of slowing down before the Brexit vote, according to a report from BDO LLP.
Its Business Trends Report has revealed that “rising uncertainty” ahead of the EU referendum dragged down business output and optimism to three-year lows for the second month running.
Business output – intended to reflect the order pipeline of companies over the next three months – was found to have dropped to 99.0, compared to 104.1 a year ago.
Business optimism – predicting business growth over the next six months – also fell; down to 98.9 from 103.9.
The UK manufacturing optimism sub-index slumped to 83.8, suggesting tough times ahead for those businesses in the manufacturing industry.
Furthermore, small firms’ intentions to recruit more staff has also hit a two-year low with BDO’s Employment Index dropping to 101.4.
Peter Hemington, partner, BDO LLP, said of the research:
“The uncertainty prompted by Brexit has disrupted investment in the UK economy, but the signs of a slowdown were already showing ahead of the decision.
“In all likelihood, whatever arrangements the UK eventually arrives at with the EU won’t look very different from what we have at the moment. So businesses cannot afford to get caught up in the hysteria. They need to hold their nerve and continue to invest in the UK.”