UK business confidence bounced back in January after the election of a majority government saw political uncertainty recede. This comes from a survey carried out by the Institute of Chartered Accountants in England and Wales (ICAEW).
Business confidence was at its lowest point for a decade at the end of last year, at -20.6. It has now recovered to 1.3, the first time it has been positive since the third quarter of 2018.
Along with this increase in confidence, the manufacturing sector’s performance has also increased. The IHS Markit/CIPS manufacturing Purchasing Managers’ Index (PMI) rose to 50 in January as new orders and business confidence recovered. The score was above December’s reading of 47.5, and higher than an initial estimate of 49.8.
Although there is a positive mood surrounding British business, the ICAEW also warned that the underlying economic position remains challenging for UK firms. Many business owners responding to the ICAEW’s survey remained cautious about how much they will invest in their business over the next few months.
Chief Executive of the ICAEW, Michael Izza, commented on the survey: ‘Businesses are feeling more confident about the future now the political deadlock has ended. But while some uncertainties have ease, much remains unknown around future trade agreements and regulatory alignment.’
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“This is a good sign for the UK economy. Higher confidence in UK businesses means people are more likely to invest in them.”
Nigel Holland’s comment