British business confidence plunged to its lowest level in seven-and-a-half years, after the surprise "Brexit" vote, survey results from the Confederation of British Industry (CBI) showed Monday.
The quarterly CBI Industrial Trends survey showed that 52 percent of firms were less optimistic about the general business situation than three months ago, while 5 percent said they were more optimistic, giving a balance of -47.
That was the lowest figure since January 2009, when it was -64, the survey said. Optimism about export prospects for the year ahead also fell, down to -11.
In the June 23rd referendum, 52 percent Britons opted to leave the European Union.
The number of firms citing political/economic conditions abroad as a constraint on export orders in the coming three months rose to a thirty three year high of +53. That was the highest since January 1983, when it was +54.
In the next three months, total new orders are expected to be flat, the lowest balance since January 2012, when it was -2. Domestic orders are also anticipated to be broadly flat with a balance of +1.
Employment is set to decline in coming months as the corresponding balance eased to -6.
"It's clear that a cloud of uncertainty is hovering over industry, post-Brexit," CBI Chief Economist Rain Newton-Smith said.
"We see this in weak expectations for new orders, a sharp fall in optimism and a scaling back of investment plans."
In three months to July, the output balance reached +16, a level last seen two years ago. Similarly, the order book balance rose to +9, the highest since July 2015.
New order balance was the highest in a year, while export orders were broadly flat.
Manufacturers' investment intentions deteriorated, both for buildings and plant & machinery, the survey said. They remained keen on spending on training & retraining.
The survey also found that the U.K.'s competitiveness in international markets improved at the strongest pace in over six years, partly due to a weaker sterling, with a further boost expected next quarter.
A closely-watched survey by Markit showed last week that the U.K. private sector activity contracted at the steepest pace since early 2009, post-Brexit.
The decline in the services sector was worse than that in manufacturing. The fall in the services business expectations index was also the largest on record and employment in the sector decreased for the first time since December 2012.
by RTT Staff Writer
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