|British economy’s business confidence leaped to its highest level since the 2016 UK European Union membership referendum or the Brexit referendum, which asked the electorate if their country should remain a member of, or leave, the EU / Photo by: Kleon3 via Wikimedia Commons|
British economy’s business confidence leaped to its highest level since the 2016 UK European Union membership referendum or the Brexit referendum, which asked the electorate if their country should remain a member of, or leave, the EU. This is according to the British daily newspaper The Guardian.
UK Business Leaders, Supporting the UK’s EU Membership
While the referendum resulted in favor of the United Kingdom leaving the European Union, about 200 UK business leaders voiced their support beforehand for the country to stay in the EU. These business leaders cautioned that leaving the political and economic union would threaten jobs, deter investment, and put the country’s economy at risk. They added that Britain will be better off, safer, and stronger if it is to remain as a member of the EU. The business leaders likewise emphasized that businesses in the country need unrestricted access to the Europe market, comprising about 500 million so that it will continue to create jobs, invest, and grow. Nevertheless, the government succeeded in initiating the official EU withdrawal process following the result of the referendum.
Since then, Brexit concerns have started to affect the country’s business confidence. There were delays in hiring workers and a spending freeze. One of the biggest recruitment companies in the UK, Hays, is among the firms that confirmed how Brexit uncertainty slowed UK trading and damaged confidence among their business clients. Another leading firm Micro Focus, which provides IT services, also said business had “deteriorated” as business customers faced an uncertain outlook so they put off spending.
|While the referendum resulted in favor of the United Kingdom leaving the European Union, about 200 UK business leaders voiced their support beforehand for the country to stay in the EU / Photo by: Christoph Scholz via Wikimedia Commons|
Business Confidence Improved
For the first time since the said referendum, a community of UK business leaders, the Institute of Directors (IoD), shared that the country’s business confidence leaped to its highest level. This was after IoD conducted a poll on its members, showing that the confidence measured swing positive and hit 21% in December from 18% a month ago.
How IoD Measured the Country’s Business Confidence
The country’s business confidence is a net balance of the UK companies that are optimistic about the economy and the few firms that remain pessimistic. The result had already been negative for over 18 months before the recent poll.
IoD said that the December business confidence figure is, by far, the highest since the EU referendum in 2016. The result also shows that the new majority government of British Prime Minister Boris Johnson meant that company directors now have a support structure in which they can put their plans to invest, expand, and hire staff. Yet, the poll also shows that businesses still consider the UK’s long-term relationship with the EU a “cause of concern.” The members believe that business confidence in their country is still sensitive when it comes to Brexit developments and it may continue during the government’s negotiations this 2020.
Directors working for larger firms are the ones that are more optimistic about the economy’s prospects for 2020 and they are also more upbeat about their own company’s prospects from 26% in November to 46% in December. Aside from the increase in business confidence level, there was also an increase in the companies’ investment intentions in 2020. This is even though the majority of those polled expected that they will be hit with higher costs in the next 12 months. IoD’s body explained that it will be a difficult task for the government to support the labor market as well as cut the mounting bills of the firms.
IoD’s chief economist Tej Parikh previously said that UK’s directors will be entering the new year with a “little more festive cheer” than what was expected a few weeks ago. So far, the government’s agenda outlined the plans to develop tax credits and broaden or increase research.
|The country’s business confidence is a net balance of the UK companies that are optimistic about the economy and the few firms that remain pessimistic. The result had already been negative for over 18 months before the recent poll / Photo by: Kaihsu Tai via Wikimedia Commons|
New Business Density
Our World in Data, a platform that provides data and research on global problems, shares the number of new businesses registered in the UK, measured per 1,000 people aged 15 to 64. The new business density data of the United Kingdom is as follows: 2010 (9.78 new registrations), 2011 (11.03), 2012 (11.94), 2013 (12.56), 2014 (14.06), 2015 (14.56), 2016 (15.74).
Other countries with a high number of new business registrations in 2016 include Australia (15.51), Estonia (20.76), Botswana (18.37), South Africa (10.22), New Zealand (14.5), Iceland (12.14), and Bulgaria (10.89).
Activities of businesses, regardless of how small, impact the economy. They boost employment, which also influences other standard-of-living metrics in the country, and pay taxes to the country. This only means that having more business in the country brings in more money to improve public services, develop schools, repair roads, and other government projects.
UK’s business confidence level now indicates that business managers of several companies feel more optimistic about their organizations’ or the economy’s prospects for 2020. Furthermore, since business confidence and economic growth are positively correlated, this could overview a positive state of the economy for the United Kingdom.