UK business confidence has fallen to its lowest point this year, research finds.

UK business confidence has fallen to its lowest point this year, research finds.

The Optimism Index from accountant BDO, which predicts business performance two quarters ahead, has hit a seven-month low, falling for the fifth consecutive month from 93.5 in June to 93.1 in July. 



This follows a brief resurgence in business confidence seen in the first quarter of 2012, where confidence reached as high as 98.0, but now reads at the lowest level since December 2011.

The index has also moved further away from the crucial 95.0 mark that indicates growth, suggesting contraction for the remainder of 2012.



Service sector confidence declined in July, falling by 2.1 points to 93.8. This dip in confidence follows consistent increases between February and May, demonstrating how unsettled optimism levels in key UK sectors are generating the zigzag pattern of business confidence in the overall UK economy.

Despite the findings, confidence in the manufacturing sector improved substantially in July, moving up from 83.8 in June to 90.5 this month, following a decline of 8.4 points from May to June.

BDO partner Peter Hemington says, ‘This month’s figures serve as a stark reminder of the continuing difficulties the UK economy faces, with zigzagging business confidence undermining the improvement in confidence that we saw at the start of 2012.’

However, Hemington adds that there is cause for some optimism in the revived confidence in the manufacturing sector. ‘The sector should be applauded for taking a pragmatic and adaptable approach to diversify exports away from the volatile Eurozone. ONS figures in July showed that for the first time more than 50 per cent of the UK’s goods went to countries outside the Eurozone.’

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