Business confidence nosedives in the aftermath of Brexit vote

Business confidence has nosedived by almost eight points in the space of just one week since the shock EU referendum result, which saw 52% of Brits vote to leave the Union.

The business confidence index stood at 112.6 between June 21 and 23, but this slumped to 105 between June 28 and July 1, according to the YouGov/Cebr Business Confidence Index.

The proportion of businesses that are pessimistic about the UK economy over the next 12 months doubled from 25% to 49% in the aftermath of Brexit.

Businesses’ optimism about their own company also spiralled from 118.7 points to 109.4 as uncertainty surrounding the UK’s future shattered confidence across the country.

Firms are also “increasingly pessimistic” about their operations, with hopes for domestic sales, exports and capital investment all declining sharply since the historic vote.

The domestic sales index, measuring optimism about sales over the next 12 months, dropped from 118.8 between June 21 and 23 to 104.9 between June 28 and July 1, while the exports index also went into a tailspin, falling from 115.3 to just 99.8.

The capital investment index slumped from 108 in the days before the referendum to 100.1 last week.

Retail reaction

Findings of the latest YouGov/Cebr survey of more than 1,500 business decision-makers were revealed today as businesses begin to plan for life outside of the EU.

Retailers were divided on whether the vote to leave the Union would be good or bad for the UK.

Debenhams chairman Sir Ian Cheshire described Brexit as “the less attractive option”, while Ann Summers boss Jacqueline Gold said she was “devastated by the decision” to quit the EU.

Carpetright chief executive Wilf Walsh said he was “bitterly disappointed” by the result of the referendum and Made.com founder Ning Li voiced his concern as “a foreign immigrant entrepreneur”.

However, Theo Pahpitis, who was a vocal supporter of the ‘leave’ campaign, said “the future is what we make it”, while Co-op boss Richard Pennycook issued a rallying cry.

“Our message is positive,” he said, “we’ve been through a period of uncertainty and we now know the outcome. Now we need to get on and seize the opportunities.”

Cebr director Scott Corfe said: “So far the only evidence we have for how the economy is in the wake of the Brexit vote comes from the markets which are showing a mixed picture. These figures show what is happening on the ground and they suggest a significant shock reaction.

“Not only are businesses feeling much more pessimistic in general about the state of the economy, but their own expectations for domestic sales, exports and investments over the next 12 months have gone off a cliff.

“Hopefully this is a short-term panic reaction and confidence will edge up again once the dust settles.”