Confidence among UK businesses has slid to its weakest level for almost two years, according to new figures.
The latest business trends report by accounting and advisory firm BDO said it also witnessed the biggest month-on-month fall in sentiment among firms since 2021 after they digested the impact of the autumn Budget.
Firms said they expect to come under pressure from rising costs, reduced customer confidence and falling orders.
Policies that address the continued effects of inflation and pricing challenges are vital
The BDO optimism index fell 5.81 points to 93.49 in November – the weakest reading since January 2023.
Data showed declining optimism across the services and manufacturing sectors, ahead of planned increases in national insurance contributions and the minimum wage as part of Chancellor Rachel Reeves’ Budget.
Firms also said that their output declined in November in the face of weak consumer confidence, indicating a potential contraction in the economy.
The data also highlighted that employment returned to decline over the month.
In October, the report’s employment index showed growth for the first time in 15 months but swung lower again in November in the face of “ongoing challenges” in the labour market.
Kaley Crossthwaite, partner at BDO, said: “December marks the end of a tough couple of years for businesses and the drop in business confidence this month is not a surprise given the significant challenges they continue to face.
“While it’s encouraging to see businesses planning ahead already and finding efficiencies to manage rising costs, meaningful growth in 2025 will only happen with targeted support from the Government.
“Policies that address the continued effects of inflation and pricing challenges are vital.
“Resilience remains a defining feature of UK mid-market businesses, and with the right support they are well positioned to weather these challenges, create jobs and drive growth.”
