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6 June, 2016 - 10:45 By Kate Sweeney

Brexit uncertainty puts brake on business spending

A pause on investment and hiring decisions in the run-up to the EU referendum has left the UK economy on hold, according to the latest Business Trends Report by accountant and business adviser BDO.

The firm warns that British businesses must start to invest again following the referendum “or we face a worrying future.”

Its latest report reveals that the uncertainty ahead of the decision about EU membership has cast a shadow over the economy, leaving business investment weak and growth expectations amongst UK corporates falling for the 10th month in a row.

BDO’s Output Index – which reflects companies’ experience of orders on hand – now sits at 99.7. This is the first time since 2013 that it has fallen below the 100 level that indicates UK long-term trend growth at about two per cent.

The uncertainty around the EU decision is also contributing to a slowdown in job creation. BDO’s Employment Index – which shows firms’ intentions to hire – has dropped to 101.2.

BDPO partner Gary Hanson (pictured), from the firm’s Cambridge office, said: “Private sector capital investment has been sluggish throughout this recovery and recent official figures show sharp falls – no doubt related to Brexit fears.

“This fall has no doubt contributed to UK businesses’ expectation that economic growth will fall behind its long term trend for the first time in nearly three years.

“In the end, investment drives productive capacity, growth and living standards. After the referendum, we must see businesses starting to invest or we face a worrying future.”  

Kiss Communications

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