Resilient growth expectations reported by UK private sector firms in June
At +39% in June, the net balance of UK companies expecting a rise in business activity over the next 12 months is down from +41% in February and remains lower than the average since this index began in 2009 (+46%).
The below trend degree of confidence recorded across the UK private sector largely reflects subdued service sector optimism in June (+35%), which remains well below that seen among manufacturers (+57%).
UK business expectations are still relatively upbeat in comparison to the global benchmark in June (+31%).
At +39%, the degree of positive sentiment recorded by UK private sector firms is comfortably above those seen in the euro area (composite index at +33% in June), as well as developed nations overall (+34%).
Survey respondents in Europe and emerging markets widely note that global trade tensions and the prospect of rising tariffs are key factors holding back growth expectations.
Anecdotal evidence from UK private sector companies indicates that Brexit-related issues remain the main source of anxiety, although some survey respondents report optimism that the a smooth transition will begin to take place in the coming 12 months.
Heightened economic uncertainty continues to constrain business investment plans among both manufacturers and service providers.
At +10% in June, the net balance of UK private sector firms expecting to boost their capital spending in the next 12 months is well below the peak seen in early 2014 (+24%).
Moreover, the latest figure for capex plans is relatively weak in an international context (equivalent global index at +13%) and notably softer than that seen across the euro area in June (+16%). ■