The results of the survey, published by the business advisory and accounting firm BDO, showed that business confidence among UK companies reached its lowest level since the beginning of 2023 in November, which was caused by rising costs, lower customer confidence and a drop in order volume. Overall, November saw the biggest month-on-month fall in sentiment among firms since 2021 after they digested the impact of the autumn budget.
The BDO optimism index fell in November to 93.49 points (the lowest value since January 2023) from 99.3 points in October. 100 = average value. Above 95 = positive. BDO’s Business Trends is a ‘poll of polls’ and comprises multiple surveys covering 4,000 respondents.
The data also showed that business optimism fell in the service and manufacturing sectors, but the significant drop in the overall index was primarily due to the sub-index of optimism in the service sector (it fell to 93.19 from 99.34 in October). The output index also recorded a sharp drop - from 97.86 to 94.66 (the lowest value since October 2023). The services output index fell to 3.37 points to 95.03, while the manufacturing output index declined to 91.74 amid weakening domestic and overseas demand. Meanwhile, the employment index fell by 0.44 points to 95.96 - in the face of "ongoing challenges" in the labor market - after rising in October for the first time in 15 months.
"The drop in business confidence in November is not a surprise given the significant challenges they continue to face. Meaningful growth in 2025 will only happen with targeted support from the government. Policies that address the continued effects of inflation and pricing challenges are vital," said Kaley Crossthwaite, partner at BDO.