Business Confidence Falling

Mark Dennis



Following a brief respite at Q2 when business confidence held firm, the Savanta Business Confidence Index (formerly the Charterhouse Business Confidence Index) resumed its downward trend during Q3, reaching a new 6-year low of 45.
Key findings include:
• Since 2011, business confidence has fallen whenever there’s been a period of political or market uncertainty: we can now see the effects of the General Election on the horizon and continuing Brexit uncertainty
• It has a history of being higher among larger businesses, i.e. those with annual sales of over £1m vs smaller, owner-managed businesses
• Significantly, the number of new start-ups has fallen from 416,000* in 2016 (the year of the referendum) to 364,000* in 2019, a fall of 12.5%. Looked at another way, if the annual number of new start-ups had remained at 416,000 in 2017, 2018 and 2019, there would have been 74,000 more new business launches in Great Britain.
More difficult to quantify is the amount of business investment among established businesses that has not taken place since the referendum due to falling confidence among businesses. Suffice to say that with the number of established businesses outnumbering start-ups by a factor of more than 10, the ‘lost’ investment is likely to be substantial. (* Source: BankSearch)
• Geographically, all regions have recorded significant falls in business confidence since Q4 2015, ranging from 12 points in the North/North West to an 18-point fall in Wales/South West. Scotland, with a fall of 16 points, has consistently been the least confident region overall, not only since the announcement of the EU referendum, but generally since we began tracking business confidence in 2011.
• Similarly confidence among all major business sectors has decreased: the biggest falls have been seen among the Transport sector and the Education sector, both recording decreases of 20 points since Q4 2015. This contrasts with the 6-point fall seen in the Agriculture sector where businesses have historically been less optimistic than other sectors, but where confidence has remained relatively stable
Savanta Infographic

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