The Institute of Chartered Accountants in England and Wales (ICAEW) has revealed that confidence levels amongst UK businesses are below zero, despite an increase in profit growth.
In the fourth quarter of this year, profit growth rose to 4.1%, up from 3.4% in the previous quarter. Such growth is expected to increase to 4.7% in 2018 as a result of rising sales and a slowdown in input cost inflation.
However, a survey carried out by ICAEW revealed that business confidence levels were low, peaking at -3.4 on the ICAEW’s Business Confidence Monitor, although confidence levels did pick up within certain industries. Confidence in the IT, energy and construction sectors rose significantly.
Commenting on the findings, Michael Izza, Chief Executive of the ICAEW, said: “While businesses are struggling to be confident in the current environment, there are reasons to be more optimistic. Businesses are controlling costs, and there is finally some improvement, though small, in export sales growth. These findings highlight the cliff edge that the UK economy is on at the moment. Whilst the recent rise in interest rates was not unexpected, any ‘sudden shocks’ from Chancellor Philip Hammond in the upcoming Autumn Budget could potentially have a ‘serious impact’.