Business output slumps amid Brexit uncertainty, report states
- Credit: PA
The UK economy is showing signs of stuttering amid mounting uncertainty following Britain's vote to leave the EU, according to a report.
Business optimism and output have slumped to three-year lows for the second month running under the weight of Brexit concerns, according to accountants BDO.
The firm's business trends report revealed that business output, which reflects company orders for the next three months, slipped to 99 last month, compared to 99.7 in May and 100.6 in April.
It said business optimism also took a hit, falling to 98.9 in June from 99.4 in May, with UK manufacturing holding the bleakest outlook for future trade.
Peter Hemington, partner at BDO LLP, said while Brexit has impacted investment in the UK economy, the slowdown was already in full swing when the vote took place.
He said: 'In all likelihood, whatever arrangements the UK eventually arrives at with the EU won't look very different from what we have at the moment. So businesses cannot afford to get caught up in the hysteria. They need to hold their nerve and continue to invest in the UK.
'We are at a crucial moment where we must be sensible in protecting the UK economy. We need a plan of action now that gives businesses the added confidence to progress with investment plans.'
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The update comes after the National Institute of Economic and Social Research (NIESR) said the British economy experienced 'intensifying contraction' in June, and growth over the next few months is forecast to rapidly deteriorate following the Brexit vote.
GDP estimates from NIESR show that output grew by 0.6% in the three months to June, but that was largely due to a strong April skewing the figures.
However, official data and a string of surveys show a mixed picture of the UK economy in the run up to the Brexit vote.
The UK's manufacturing industry beat expectations in May despite activity easing back from a surge in the previous month.
The Office for National Statistics said manufacturing output came in at a better-than-expected fall of 0.5%, dropping down from April's rise of 2.4%, but remaining ahead of a predicted slide of 1.1%.
Last week's Markit/CIPS UK Manufacturing purchasing managers' index (PMI) showed the industry had stepped up to a five-month high and broke free of its 'early year sluggishness' on the run up to the Brexit vote.
But PMI's for the services sector and the construction industry proved more gloomy, with the latter experiencing its worst month in seven years for June.