Hopes of a pick-up in UK growth have received a blow, with surveys showing business investment plans being curtailed amid deepening gloom about Brexit and spending on credit cards falling.
A poll by Deloitte of 122 finance directors from some of the UK’s biggest companies showed 42% were less optimistic than they were three months ago, up from 17% in the previous quarter.
The survey, taken in the wake of the inconclusive General Election result last month, also showed increased pessimism about the impact of Brexit on the business environment.
A lower proportion of finance directors planned to increase capital spending while the numbers expecting to cut back on hiring rose sharply.
Deloitte chief economist Ian Stewart said the poll took place “at a point of high political uncertainty” but that sentiment was still above levels seen last summer.
Separately, credit card firm Visa reported a 0.3% fall in spending in the April-June period compared to the same quarter last year.
It was the biggest fall since the third quarter of 2013.
Image: Credit cards spending dipped in the second quarter
Analysts said it could add to calls for the Bank of England to keep interest rates on hold as some policy makers consider an increase from the present historic low of 0.25%.
The UK economy grew by just 0.2% in the first quarter of 2017, with the slowdown blamed on consumer weakness as higher inflation – driven by the pound’s weakness after the Brexit vote – squeezes household incomes.
Meanwhile, business groups have been pressing the Government for clarity on trading arrangements with the EU as divorce talks progress, and offering their views on the shape of any deal.
A poll from the British Chambers of Commerce on Monday appeared to reject Theresa May’s previous insistence that no deal would be better than a bad deal.
It found just 2% who said their preferred option would be to leave the single market and customs union and rely on World Trade Organisation rules for trade.
The survey found 34% wanted to remain in both the single market and customs union while 28% favoured a comprehensive free trade agreement and customs agreement – as the Prime Minister has set out as her objective from talks.
Elsewhere, the CBI has called for Britain to remain in the single market and customs union during any Brexit transition period after the negotiation deadline in March 2019.
The business lobby announced at the weekend that it had appointed Tesco chairman John Allan as its vice-president from October, confirming an exclusive report by Sky News.
The move is expected to lead to Mr Allan taking over as president next year – steering the organisation through the Brexit process – when the current incumbent Paul Drechsler leaves.
Source: SKY News