UK business confidence falls to joint record low, highest in Europe

Both the EU and global averages are below that of the United Kingdom—16 per cent and 22 per cent respectively.

UK businesses also expect rapidly rising inflation, fuelled by increased energy costs, to drive down margins, as profit forecasts turned negative for the first time in the survey's history, at minus 2 per cent.

The data reveals that companies are concerned that they will be unable to pass on higher costs to customers, with 59 per cent of the respondent firms predicting an increase in their output charges—the second-highest on record, following a survey record of 62 per cent in February.

Cost expectations remain high despite 3 per cent fewer companies predicting a rise in staff wages, down from 83 per cent to 80 per cent.

Manufacturers are relieved to see a decrease in supply chain challenges, reporting their lowest expectations for non-staff costs in 12 months.

Twenty-one per cent of UK employers predict a rise in employment—almost double the rest of Europe at 12 per cent—as firms look to fill staffing gaps that appeared during the COVID-19 pandemic.

There remains a sharp regional divide in business confidence in June, as half of the 12 UK regions expect to see a decline in profits. Businesses in the South East continue to feel the most secure and expect to see the sharpest rise in employment over the next 12 months (34 per cent).

However, optimism in other English regions is on the rise—the West Midlands (39 per cent) and Yorkshire and the Humber (29 per cent) moved to become the second and third-most-optimistic regions for activity, ahead of London (30 per cent).

Fibre2Fashion News Desk (DS)