In our survey of over 1,000 UK businesses, optimism for the year just gone has held up with 65% of businesses saying confidence has increased or remained the same since January 2016 and 58% of businesses believing they will experience growth this coming year with an average across our respondents of 4% growth in 2017.
The top areas for concern among businesses for the year ahead include the impact and outcome of Brexit negotiations, along with political and economic uncertainty within the Eurozone. However, while many are worried and concerned about the impact of Brexit, a large number of businesses want to “just get on with it” with one respondent adding that by making doom-laden predictions “we will talk ourselves into difficult times.”
When compared to the same survey last year, business confidence in 2016 was dented, with 40% of respondents at the start of the year feeling optimistic that their confidence would grow, but only 22% telling us at the end of the year that confidence had increased.
The results showed that larger firms were more willing to invest in their business and people than smaller businesses, perhaps suggesting they are trying to invest now to avoid possible disruption in the future.
Do you believe your confidence in the UK economy will increase, remain the same or decrease in the year ahead?
When it comes to the year ahead, confidence differs across industries; those in transport and logistics, financial services and healthcare were most likely to be optimistic for the year ahead while charities, recruitment firms, and those in the public sector were most likely to be pessimistic. Overall, the majority of businesses we asked expected their confidence for the year ahead to remain the same, however more businesses expected it to increase at the start of 2016 than compared to the start of this year.
The impact of the EU referendum on businesses came through strongly. 86% of businesses said it had some impact on their confidence in the UK economic climate, with the largest number (31%) saying it had had a medium impact.
of businesses believe they will experience growth in 2017
Barclays predicts that growth will fall in the UK during 2017 to around 1% for the year but will recover in 2018. This could be stronger if the Government gives a clearer indication of the UK’s possible trading relationship with Europe after Brexit. Our survey revealed a striking divide across businesses in terms of what model the UK’s negotiators should aim for – with an equal number of 23% of responses all saying that either the Swiss, Norwegian or Canadian models would be their preferred relationship with Europe.
Our survey also indicated that corporate businesses are more likely than smaller businesses to be expanding their international operations with 29% saying they would increase trading overseas, compared with 18% of small businesses, and 8% saying they would start trading overseas for the first time, compared to 5% of small businesses. Perhaps because of this, corporates were also more likely to say they were worried about Brexit negotiations than SMEs – almost two thirds of corporates named Brexit negotiations in their top three greatest concerns, compared with just under half of SMEs.
Gavin Isle, Head of Barclays Corporate Banking, UK said: “Few would have predicted that 2016 would have been the year that Britain voted to leave the EU, Donald Trump would be elected US President and my own football team, Leicester City, would have been crowned Barclays Premier League champions. In fact, you would have got odds of 3,000,000/1 on this scenario1, so you would be forgiven for being cautious of making predictions for 2017.
“Our business sentiment survey revealed that UK businesses are resilient in the face of change, and optimistic about their growth trajectories, but understandably cautious in the face of a great deal of uncertainty. The top two concerns that businesses identified – the progress of Brexit negotiations and political and economic uncertainty within the Eurozone – may not have been as much as a surprise as the triumphs of Farage, Trump and Ranieri but this doesn’t lessen their potential impact.”
The Barclays business sentiment survey was designed to understand the views of British businesses on the current economic environment and explore some of the challenges and opportunities for 2017. A total of 1,010 businesses took part between 3 and 11 November 2016. All answers were given anonymously. Larger businesses and corporates for the terms of this report are those with revenue of £6.5m/year and above.
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