British businesses continue to express caution about the economic outlook, as revealed by recent surveys conducted by the Confederation of British Industry (CBI) and the Institute of Directors (IoD). The surveys highlight ongoing challenges faced by businesses, including weak household spending and geopolitical tensions, particularly in the Middle East.
Survey Findings
The CBI survey, which gathered responses from 659 businesses between April 27 and May 13, indicates that the output expectations balance for the next three months slightly improved to -24 in May from -25 in April. However, this figure remains significantly lower than February’s 15-month high of -13, prior to the escalation of conflict in Iran.
Additionally, the output balance for the three months leading up to May dropped to -31 from -24 in April, though it was an improvement from March’s four-month low of -35. Selling price expectations, while still elevated, have decreased from April’s three-year high.
Small Businesses Show Slight Optimism
In contrast, the IoD survey, which included 615 responses collected between May 15 and May 27, shows a slight increase in economic confidence among smaller firms. The IoD’s economic confidence index rose to -53 in May from -64 in April, recovering from its lowest point since the series began in 2016, recorded in March. Notably, almost half of the respondents in the IoD survey were businesses with fewer than ten employees.
Impact of Geopolitical Tensions
CBI Deputy Chief Economist Alpesh Paleja noted that ongoing tensions in the Middle East are contributing to the economic uncertainty, with businesses increasingly concerned about potential cost increases. This geopolitical instability adds another layer of pressure on businesses already grappling with domestic economic challenges.
These surveys reflect the cautious sentiment among UK businesses as they navigate a complex economic landscape marked by both domestic and international pressures. The findings underscore the need for businesses to remain vigilant and adaptable in the face of ongoing economic challenges.
Original reporting: Appleton, WI News Feed (HLL/CB) — read the source article.
