Following a brief respite at Q2 when business confidence held firm, the Savanta Business Confidence Index (formerly the Charterhouse Business Confidence Index) resumed its downward trend during Q3, reaching a new 6-year low of 45.
Larger businesses with annual sales above £1m continue to be the most confident group. However, despite a rally at Q2 that saw confidence increase by 4 points to 51, confidence among larger organisations slipped again at Q3 by 2 points t0 49.
Moreover, confidence among smaller established businesses, who represent the vast majority of enterprises by number, fell 3 points to finish Q3 at 44.
New start-ups remain the least confident segment on 43, although fledgling businesses nevertheless managed to retain their score from Q2.
In terms of geographic location, confidence decreased in 5 out of the 6 regions. This was most notable in Wales/South West and Scotland who recorded falls of 6 points and 4 points respectively to end Q3 as the two least confident regions. The 4-point fall in Scotland in particular resulted in an index score of just 38, an exceptionally low score even after taking account of the lower confidence levels usually seen in Scotland.
The most ‘optimistic’ regions are London and the North/North West, both on 47. Nevertheless, an index score of less than 50 means more businesses in both regions are pessimistic rather than optimistic about the current state of the economy.
Industry sector continues to be a stronger differentiator of sentiment than region, both in terms of the size of the quarterly shifts within a given sector and the degree of variation from one sector to another.
At Q3 confidence fell in 7 of the 9 sectors, with the biggest falls occurring in Transport (down 11 points to 42), Education (down 8 to 40) and Other Services (down 7 to 45).
The two sectors to record gains, 2 points in both cases, were Construction and Wholesale who ended the quarter with scores of 48 and 47 respectively.
In terms of age of business owners, the picture has turned on its head, with the under 35s being replaced by the 65+ group as the most confident. This follows a fall of 5 points among the youngest age group to 46 and a 2-point gain among the over 64s to 48.
Commenting on the findings Mark Dennis, Director of Savanta, said
“With uncertainty over Brexit continuing throughout quarter 3 it was too much to expect the quarter 2 plateau to be anything more than a temporary phenomenon. The results in quarter 4 will no doubt be heavily influenced by developments over the coming days which will determine whether the UK formally withdraws at the end of October or whether the uncertainty is set to continue with an extended deadline and potentially an accompanying General Election.”
Quarter 3 findings are from Savanta’s MarketVue Business Confidence programme (formerly the Charterhouse Business Confidence Survey), conducted among 3,144 British businesses from start-ups to companies with £1bn turnover, surveyed from 1st July to 19th September 2019. Indices are mean scores based on a scale of ‘extremely positive’ (100), ‘fairly positive’ (75), ‘neither positive nor negative’ (50), ‘fairly negative’ (25) and ‘extremely negative’ (0).
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