Business confidence back in negative territory amid Brexit uncertainty

Business confidence in Yorkshire and the Humber has began to fall this quarter, according to the latest ICAEW Business Confidence Monitor (BCM).

Although the region has seen business confidence maintain on an upward trend since Q3 2017, it has now slipped into negative territory at-9.9.

This fall follows on from two quarters in which business confidence was positive.

In terms of market conditions, the BCM noted that exports are up 4.6% year on year, which continues an existing trend, while domestic sales are up 3.6%.

35% of businesses say that marketplace competition is presenting a growing challenge to their performance, and companies are only able to raise their selling prices by 1.2% in the year.

The BCM also said that export sales are expected to rise by 4.1% over the next year. Companies anticipate increases of just 0.2% and 0.8% for staff development and capital investment and a rare contraction of -0.1% for Research and Development.

Dr James Callaghan, ICAEW Yorkshire and Humber regional director, said: “Following improvements in business sentiment throughout 2018, it is disappointing that confidence has once again slipped back into negative territory.

“Businesses in the region are facing many difficulties, mainly surrounding selling prices rising slower than high input price inflation. Wages have also grown quicker than selling prices, adding further pressure to businesses.

“With the present uncertainty surrounding the UK’s departure from the EU, and the potential of a no-deal exit, it is no surprise that confidence is low. Hopefully, as negotiations become more clear  and a deal is made in, this will allow businesses to be more confident going forward.”