According to a survey carried out by the Institute of Chartered Accountants in England and Wales (ICAEW), UK business confidence bounced back in January after the election of a majority government saw political uncertainty recede.
Business confidence was -20.6 at the end of last year, its lowest point for a decade. It has now recovered to 1.3, the first time it has been positive since the third quarter of 2018, the ICAEW found.
The increase in confidence is matched by an improved performance in the UK’s manufacturing sector. The IHS Markit/CIPS manufacturing Purchasing Managers’ Index (PMI) rose to 50 in January as new orders and business confidence recovered. The score was above December’s reading of 47.5, and higher than an initial estimate of 49.8.
Despite the positive mood surrounding British business, the ICAEW also warned that the underlying economic position remains challenging for UK firms. Many business owners responding to the ICAEW’s survey remained cautious about how much they will invest in their businesses over the next few months.
Commenting on the survey, Michael Izza, Chief Executive of the ICAEW, said: ‘Businesses are feeling more confident about the future now the political deadlock has ended. But while some uncertainties have eased, much remains unknown around future trade agreements and regulatory alignment.’