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UK business optimism weakest in over four years

Staff Writer |
The latest Markit Business Outlook survey reveals that optimism among UK companies has dipped to its lowest in over four years.

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Central features of the weaker outlook are business uncertainty surrounding the forthcoming Brexit negotiations between the UK and EU and an expected pick-up in inflationary pressures stemming from the weakening pound.

The headline figure from the survey is the net balance of companies expecting growth or contraction in their business activity over the next 12 months.

The net balance (the difference between the percentage of optimistic and pessimistic companies) has fallen to +38% in October, from +40% in June, the lowest since June 2012.

Optimism has now dimmed continuously since peaking in February 2014, with the exception of an improvement in the June 2015 survey following the General Election.

By sector, manufacturers retain the most positive overall outlook but have seen the biggest drop in sentiment since the summer, with a net balance of +47% of goods producers expecting output to rise over the next 12 months.

Service sector expectations are little-changed since June (+37%), while the construction outlook has improved slightly (+34%).

Despite deteriorating since the summer, the UK survey showed companies to have been considerably more upbeat about the year ahead than those in the U.S. and Japan and modestly brighter than the outlook reported for the EU as a whole (+36%).