UK Business Output Falls To Four-Year Low, Despite Optimism Surrounding A Post-Brexit Global Britain

It’s suggested that the slowing services sector, traditionally one of the strongest industries, is primarily responsible for the decline

UK Business Output Falls To Four-Year Low, Despite Optimism Surrounding A Post-Brexit Global Britain

UK business output has fallen to a four-year low, despite optimism surrounding a post-Brexit Britain – according to a report by BDO LLP.

Their Output Index, which indicates how firms expect their orders and sales to develop over the next three months, has revealed that growth expectations have fallen from 95.9 in March, to just 95.6 in April.

This figure is now significantly below the long-term growth trend of 100, and just fractionally above the point of contraction – which stands at 95.0.

It’s suggested that the slowing services sector, traditionally one of the strongest industries in the UK, is primarily responsible – with growth expectations falling from 95.7 in March to 95.3 last month.

This is in stark contrast to the 100.4 reported in April 2016.

Despite the negative figures, business optimism in post-Brexit Britain appears to be high, with many believing a global mindset will help drive exports.

In the report’s Optimism Index, business confidence rose from 102.2 to 102.5 in March – with the announcement of a general election and strengthening of the pound touted as possible factors for this increase.

Similarly, the manufacturing sector, which fell from just 97.2 to 97.1 in April and remains ahead of 2016’s average of 95.2, has benefited from cheap export rates.

Peter Hemington, partner at BDO LLP, said:

“There appears to be growing disconnect between what businesses are experiencing now and how they expect their order books to develop in the coming six months. Current output levels are very close to a zero-growth level, yet UK business people are strongly optimistic. This would suggest that we could be in line for a significant growth surge in early 2018.

“We haven’t seen anything quite like this since 2009. Then, UK businesses were so used to continuous economic growth that they couldn’t quite believe it when the good times didn’t immediately return. Something similar seems to be happening at the moment. UK businesses seem to be excited and upbeat about a post Brexit ‘global Britain’. This is despite their current experience of very subdued economic conditions.”

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