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UK firms' economic optimism falls to three-year low ahead of Brexit

Tom Belger
Finance and policy reporter
Business confidence has dropped since the EU referendum. Photo: Neil Hall/Reuters

British firms’ optimism about the economy has fallen to its lowest level since the EU referendum in 2016, according to a new survey.

The number of businesses worried about Brexit has also reached its highest level on record in the Lloyds Bank Business Barometer.

The figures reflect heightened concerns Britain could crash out of the EU without a deal as scheduled on 31 October, sending shockwaves through the UK economy.

UK prime minister Boris Johnson has indicated he will not ask the EU to delay Brexit, despite MPs seizing control of the parliamentary agenda and voting to order him to make the request to Brussels.

The latest September survey from Lloyds shows the balance of firms optimistic about Brexit plummeted five points to -10%, its lowest since June 2016.

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The balance of businesses concerned about the effects of Brexit also worsened, falling seven points to -25%.

But firms’ analysis of their own trading prospects over the next 12 months rose five points to 13%, though remained at its second lowest level this year.

Lloyds Bank Business Barometer

The lowest business confidence overall was reported in Scotland and Northern Ireland, according to the survey of 1,200 firms.

Hann-Ju Ho, a senior economist at Lloyds’ commercial banking division, said: “While overall business confidence this month has remained broadly steady, optimism in the economy has fallen, and both remain significantly below the same period last year, and the historic average.

“This month we are also seeing firms’ concerns about leaving the EU intensify against the backdrop of ongoing economic uncertainty.”

A report by KPMG earlier this month warned a no-deal Brexit would be likely to plunge the economy into recession, pushing up unemployment and knocking 6% off house prices.