Worries mount for UK businesses and consumers as Brexit crisis builds: Surveys

The skyline of London, on June 21, 2019. Business confidence declined in every region of the United Kingdom.
The skyline of London, on June 21, 2019. Business confidence declined in every region of the United Kingdom.PHOTO: REUTERS

LONDON (REUTERS) - Confidence drained away from British businesses and consumers in August as the Brexit crisis deepened, according to surveys that suggested the political ructions are increasingly taking a toll on the economy.

The Lloyds Bank Business Barometer slid to 1 per cent from 13 per cent in July, its lowest level since December 2011, when Britain was struggling to recover from the global financial crisis.

Separately, a survey of consumer confidence from market research company GfK was its joint weakest since mid-2013, driven lower by deepening pessimism about the economy.

Overall, the reports added to signs that Britain's economy is likely to struggle to bounce back from its contraction in the second quarter, the first time it shrank since 2012. Britain would be in recession if growth contracts in the third quarter.

"We have seen a dip in overall business confidence this month, with firms appearing less positive about their own trading prospects and the broader economy," Hann-Ju Ho, senior economist at Lloyds Bank Commercial Banking, said.

Business confidence declined in every region of the United Kingdom, Lloyds said, although the fall was steepest in the manufacturing-heavy East Midlands region of England.

British manufacturers, who account for about 10 per cent of the country's economy, are facing the possibility of a no-deal Brexit which is likely to hurt their supply chains, plus a slowdown in the global economy.

 
 

At -14, the GfK survey was the weakest since January, before which it had been lower only in mid-2013. All the survey's components, including the outlook for personal finances and the economy, declined in August.

"Until Brexit leaves the front pages - whenever that will be - consumers can be forgiven for feeling nervous not just about the wider economy but also about their financial situation," Joe Staton, client strategy director at GfK, said.