Theresa May expresses her optimism about Britain’s economic success while UK business outlook seems ominous

PM at the CBI 2016 conference
Prime Minister Theresa May gave a speech at the annual Confederation of British Industry (CBI) Conference at the Grosvenor House Hotel in London.
Credit: Tom Evans. Copyright: Crown Copyright

UK Prime Minister Theresa May attended the annual Confederation of British Industry (CBI) conference on Monday where she expressed her confidence about the country’s economic outlook in an attempt to seek business support ahead of the harsh period till the conclusion of the Brexit deal.

However, a quarterly report published from data firm IHS Markit shows that British businesses’ uncertainty has increased to a great extent due to political stress. The latter is clearly stated in the report where it is pointed out that UK business confidence has reached its lowest level since 2009.

May wants companies by her side

The business leaders gathered two days ago in London for the CBI conference where experts’ insights on how to tackle the evolving issues that firms face was discussed together with the hot topic on the UK’s relationship with the world and the European Union ahead of the European Council summit on Sunday.

The British PM was there to address to the business industry that Britain is heading to Brussels for a deal that will secure what is best for the UK and will enhance the country’s economic prospects. Furthermore, Ms May requested the support of the all the companies in order to be able to take the most of the imminent Brexit deal and unlock all the substantial opportunities. More specifically, Theresa May stated last Monday: “There is one paramount issue facing our economy at the moment. We now have an intense week of negotiations ahead of us. What we’ve agreed puts our future economic success first. The deal we will secure with the EU has securing jobs and prosperity at its heart.”

CBI President backed up Theresa May and mentioned that the Brexit deal that the PM will bring to the UK to be voted should be supported in order for the country to thrive. In detail, John Allan said at his opening speech at the 2018 CBI Annual Conference: “But to ensure that the future continues to be prosperous, that working relationship between business and government must continue. The uncertainty of Brexit will hinder that future prosperity and that is why compromise and collaboration must be reached. The message from business to politicians is clear – back the deal as another one is not waiting in the wings while the outcome of the 2016 referendum must be upheld.

IHS Markit reports lost business confidence

On the other hand, the recent report by IHS Markit clearly reveals that the British firms have been hit tremendously by the country’s political uncertainty and have become less confident about the growth outlook compared to what it was believed last summer. Thus, based on the IHS Markit UK Business Outlook survey, the net balance of the companies waiting for a rise in business activity in the next 12 months is +32%, which is 7% down from June’s figures.

Tim Moore, Associate Director at IHS Markit, outlined that: “Intense headwinds from domestic political uncertainty and a more subdued worldwide economic outlook have resulted in a fall in UK business confidence to its weakest since the IHS Markit Global Business Outlook series began in October 2009. Reports from survey respondents widely indicate that Brexit-related concerns have weighed heavily on business investment and staff hiring plans.”

What is more, the seasonally adjusted IHS Markit/CIPS UK Services PMI® Business Activity Index dropped to 52.2 in October from 53.9 in September pointing the slowest pace of business activity expansion since March. The latter shows that the UK’s services sector, the largest contributor to economic growth, has slightly developed and lost momentum mainly due to Brexit concerns and the outcome of the upcoming deal.

All in all, it is quite obvious that the UK business environment is under continuous turmoil the moment that Theresa May wants to calm the negative outlook by taking them along and ensuring their support at a crucial point in time. Brexit negotiations seem to be a step closer ahead of the EC meeting but the draft deal as it stands now is not likely to be approved by the majority of the UK Parliament; something that is not going to leave the business world unaffected.

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