Key insights
- UK businesses remain pessimistic about the economic outlook, citing weak consumer spending and reluctance for large expenditures. While smaller firms show slightly less negativity, overall sentiment is downbeat. Elevated selling price expectations persist, though easing from recent highs. Geopolitical tensions in the Middle East add further pressure, raising concerns about cost increases. This downbeat sentiment in a major global economy could signal broader global economic headwinds, potentially impacting US corporate earnings and investor confidence.
LONDON, June 1 (Reuters) - British businesses remain downbeat about the economic outlook for the months to come, according to a survey from the Confederation of British Industry, although a separate Institute of Directors survey showed smaller firms were less negative.
"Activity continues to be buffeted by weak household spending and clients’ reluctance to commit to big expenditure," CBI Deputy Chief Economist Alpesh Paleja said. "Ongoing tensions in the Middle East are adding another layer of pressure, with firms increasingly alert to the risk of further cost increases."
Following are details from the reports and other recent data:
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The output expectations balance for CBI members for the next three months edged up to -24 in May from -25 in April but was well below February’s 15-month high of -13, before the Iran war
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The output balance for the three months to May fell to -31 from -24 in April, above March’s 4-month low of -35
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Selling price expectations remained elevated but fell from April’s three-year high
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The IoD’s economic confidence index rose to -53 in May from -64 in April, having touched its lowest in March since the series began in 2016
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The CBI data is based on 659 responses between April 27 and May 13 to its surveys of manufacturers, retailers and wholesalers, and consumer- and business services firms
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The IoD data is based on 615 responses between May 15 and May 27, almost half of which employed less than 10 people
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