British business confidence remains negative amid Brexit

British business confidence remains negative amid Brexit

British business confidence remains in negative territory despite a slight improvement in the third quarter.

The increased confidence has been linked to the perception that the British government might be willing to take a softer line on its Brexit negotiations with the European Union following the general election earlier this year.

Global confidence has been supported by a sustained period of economic expansion since the financial crisis, though this has been most prominent across Asia as the UK and the US continue to face headwinds.

This is according to the quarterly Global Economic Conditions Survey (GECS) produced by the Association of Chartered Certified Accountants (ACCA) and the Institute of Management Accountants (IMA).

Narayanan Vaidyanathan, senior business analyst at ACCA said: “This quarter’s GECS suggests the global economy is enjoying a strong recovery.

"While the global picture is optimistic, however, it does hide variations, with some regions doing much better than others.

"In the UK, we saw a substantial drop last quarter and a slight recovery since – perhaps as a result of the perception that the government might be open to a flexible approach to find common ground in its negotiations with the EU.

“Sentiment remains negative, however, with sterling remaining weak by recent standards, and inflation rising to 3 per cent.

"This situation may ease over the coming year with the possibility of inflation coming down and increased government spending linked to some relaxation in austerity measures – which may help with increasing confidence.”

Confidence in Western Europe as a whole also remains negative but has improved in the third quarter, which the GECS has linked to populist parties doing less well than expected in recent elections and economic expansion.

South Asia was the most confident region, with the region’s two biggest economies, India and Pakistan, set to grow strongly over the next year.

But in the US, business confidence has fallen for the second consecutive quarter as the Trump administration continues to deal with challenges in pushing through healthcare reform, tax cuts, and increases in infrastructure spending.