LONDON: UK business confidence fell to its lowest level in more than a year in November, with concerns about global growth expected to constrain investment in 2016, according to BDO.
The business advisory group said expectations that Britain’s recovery will cool, together with lacklustre global growth, meant optimism for the next six months was “skating on thin ice”. Its optimism index stood at 101.0 in November, just above the long-term average and the lowest level since last year.
While measures of output and employment were more robust, BDO said the rate of jobs growth had slowed in recent months, with November’s figure indicating that the pace of hiring was the slowest since the start of 2014.
“Doubts about the world economy are making the UK’s business people question whether now is the time to ramp up their investment plans,” said Peter Hemington, a partner at BDO.
Mr Hemington said increasing the annual investment allowance (AIA), which offers tax relief on expenditure on plant and machinery, would help to boost productivity growth and enhance Britain’s long-term growth prospects.
“We need to see the Government’s messaging around supporting the manufacturing economy backed up with action to give business the confidence to invest for the future,” he said.
The UK economy expanded by 0.5pc in the three months to September. Most economists expect growth to pick up to 0.6pc in the final quarter of 2015, led by robust growth in Britain’s dominant services sector. Separate surveys of 300 business leaders found that 72pc of respondents were upbeat about the UK’s economic outlook over the next two years.
While respondents to the poll by Eden McCallum were more upbeat about the eurozone, China was pinpointed as the most likely source of any financial crisis in the next five years.
Lord Turner, chairman of the Institute for New Economic Thinking’s governing body, said: “It’s noticeable that pessimism about the global economy has increased significantly over the past two years, with the focus of the nervousness on China.”
