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Business confidence rallies in the run up to Brexit

Philippa Whitham Senior Director 31/01/2020

Following a generally downward trend since April 2018, the Savanta Business Confidence Index rallied during Q4, with a significant rise to 48 points.

The most ‘optimistic’ regions are the North/ North-West and London, finishing Q4 with 52 and 50 points respectively. "

Larger businesses with annual sales above £1m continue to be the most confident group, with a confidence index of 50, representing an increase in score of 1 point compared to Q3.

However, confidence among smaller established businesses, who represent the vast majority of enterprises by number, rose by 4 points to finish Q4 at 48.

Although new start-ups remain the least confident segment at 44, this too represents an increase in confidence of 1 point on their Q3 score.

In terms of geographical location, business confidence increased across the UK. This was most notable in Scotland and the North & North-West who recorded a rise of 4 and 5 points respectively. Despite this rise in confidence, Scotland remains the least confident region, ending Q4 with an index of 42 points.

The most ‘optimistic’ regions are in fact the North/ North-West and London, finishing Q4 with 52 and 50 points respectively. However, with the remaining regions each recording an index score of less than 50, more regions are feeling pessimistic rather than optimistic about the current state of the economy.

Industry sector continues to be a stronger differentiator of sentiment than region, both in terms of the size of the quarterly shifts within a given sector and the degree of variation from one sector to another.

Q4 confidence rose in 8 of the 9 sectors, with the biggest increases occurring in Education (up 12 points to 52), Production (up 9 to 50), Transport (up 6 to 48) and Accommodation (up 5 to 49). Confidence in the Wholesale sector remained the same as Q3.

In terms of age of business owners, the 65+ group continued to be the most confident after overtaking the under 35s back in Q3.

Confidence amongst the youngest age group has remained unchanged at 34, following a 5-point drop in confidence during Q3.  Meanwhile, confidence has risen by 4 points amongst both those aged 35-64 (to 47) and those aged 65+ (to 52).

Commenting on the findings, Mark Dennis, Director of Savanta, said: “With the majority of our fieldwork conducted in the quarter before the 12th December general election, it is interesting to see confidence levels rise virtually across the board. We eagerly await the results from Q1 2020 to see if this trend continues now the election outcome is known.”

Q4 findings are from Savanta’s MarketVue Business Confidence programme, conducted among 3,081 British businesses from start-ups, to companies with £1bn turnover, surveyed from 1st October to 18th December 2019. Indices are mean scores based on a scale of ‘extremely positive’ (100), ‘fairly positive’ (75), ‘neither positive nor negative’ (50), ‘fairly negative’ (25) and ‘extremely negative’ (0).

Q3 findings are available here.

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