Brexit vote uncertainty weighs on UK business confidence in June

Business expectations in the UK dropped to their lowest level in four years in June, as the uncertainty ahead of the referendum took its toll, with the weakest outlooks evident in the construction and services sectors.

The headline business activity net balance for Markit´s June Business Outlook survey dropped from +43.0% in February to 40.0% - its lowest level since June 2012.

It marked the third consecutive decline since it reached the 58.0% mark one year ago.

Expectations for job creation also fell back, retreating to their weakest since February 2013.

By sectors, expectations were weakest in construction (+30%), followed by services (+38%) where they dropped to a four-year low.

Manufacturers, on the other hand, were just as confident regarding future output as they had been in February, with the corresponding gauge printing at 56.0%.

"[...] the majority of outlook survey results were received prior to the UK’s EU referendum, and the views on business prospects in the event of the UK leaving the EU suggest we are now looking at an even darker picture of the outlook now that ‘Brexit’ has seemingly become a reality.

“The survey saw nine times as many companies explicitly stating that ‘Brexit’ is likely to be detrimental to their business than those that saw the UK’s departure from the EU as being beneficial. Manufacturers were the most downbeat, with the number of companies seeing Brexit as potentially damaging outnumbering those perceiving a benefit by 11-to-one.

“Factors such as the loss of current levels of access to the single market, rising import costs and instability were generally perceived as outweighing any benefits from the boost to export competitiveness resulting from a weaker pound,” said Chris William, chief economist at Markit.