Business confidence bounces back after post-Brexit slump

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Business confidence has rebounded after the post-Brexit slump with firms reporting that they are broadly positive about their prospects for the year ahead, a survey shows.

Confidence regained much of the ground it lost in the immediate aftermath of the vote to leave the EU, the YouGov/Cebr UK Economic Index shows.

The index increased to 109.7 in August, meaning it recovered more than half the losses recorded following the referendum when it fell from 112.6 to 105.0, but it is still below pre-vote levels.

The survey of more than 500 organisational decision-makers puts the increase in confidence down to improved expectations for capital investment, revenue from domestic sales and revenue from exports over the next year.

Before the referendum 53% had an optimistic outlook for the next 12 months, a figure which dipped slightly to 46% in July and rose again to 48% in August, while just 23% are pessimistic.

However, the number of businesses that are concerned about the economy over the year ahead almost doubled from 25% in June to 49% in July, and 45% remain pessimistic, according to the latest poll.

Last week the YouGov/Cebr announced that consumer confidence saw its highest month-on-month improvement in three and a half years.

Cebr director Scott Corfe said: "The dust is settling on the EU vote and businesses are showing signs of resilience, for now at least.

"With the post-Brexit panic abating and many indicators signalling a reasonably robust short-term outlook, businesses are suggesting a greater confidence for the coming 12 months when it comes to their own operations.

"However, one red flag in these figures is the level of pessimism about the UK economy that the Brexit vote has engendered in British businesses. If these concerns materialise into reality, businesses could rapidly rein in their investment and hiring plans."

Stephen Harmston, head of YouGov Reports, said: "For the most part, the panic we saw straight after June 23 has been replaced by calm. In the short term at least, a more positive outlook from businesses and consumers will help grease the wheels of the economy - spurring spending and investment.

"What happens in the longer term is the big mystery. Once the UK shows its hand on Brexit and invokes Article 50 things could change for the worse quickly.

"But as businesses and consumers don't know when this will happen, they have seemingly decided to just get on with it."