Low levels of business confidence in 2016 could have cost the UK £2.2 billion in investment and 249,000 jobs according to new research from Newable, the business consultancy. The latest figures suggest that, had it been at the same level as the long term average (recorded between 1972-2015), the UK would have enjoyed a better business year.
Working in partnership with the Centre for Economic and Business Research, Newable launches the results from its ‘Gross Domestic Confidence’ report which reveals that a confident business is not just a by-product of economic performance, but it is an indicator of, and a contributor to, future economic performance.
The new research highlights how the turbulence of 2016 directly impacted the UK’s economic output by being negative influence. 2016 was a year of major political and economic uncertainty, brought on by a number of main events including the EU Referendum, the migrant crisis and the US presidential election. The research shows a sharp fall in the summer following the Brexit vote.
Another sharp fall in the summer of 2016 following the Brexit vote, with a 65 per cent correlation between business confidence and employment growth, with a 2 quarter lag and there is a 56 per cent correlation between a confident business and business investment with a 2 quarter lag.
The research finds that a confident outlook plays a less significant role in other factors such as determining B2B and R&D spend.
Chris Manson, CEO of Newable, says, ‘Intuitively, we know that confidence underpins commerce; it is what keeps customers buying, suppliers supplying, funders financing and employees working. Our research for the first time highlights that business outlook has a direct and tangible impact of the health of our economy.
‘If our businesses aren’t feeling confident, we aren’t creating jobs or attracting investment. As a nation, we should be supporting businesses of all sizes to help give them the confidence they need to operate at the highest levels and ultimately, attract as much investment to the UK as possible.’
Manson concludes, ‘Moving forward into 2017 it is essential that it is not only the private sector that needs to support confidence, there is a huge role for the government to play in helping to reduce uncertainty and install confidence within our businesses. Businesses need support in everything from finance to property, to importing and exporting; addressing all the key areas will help boost confidence, even in these very uncertain times.’