Business Sentiment Index – confidence continues to fall across all sectors
Business sentiment across all key sectors has continued to subside – although not as dramatically as was seen between March and April of this year.
Our data reveals that over the past year, positivity has fallen significantly from record highs to levels not seen since the first lockdown – and what we are seeing for the first time is the sectors aligning around a smaller spread of figures than we usually see; it’s clear the pain of the rising cost of doing business, recession, interest rate rises, energy prices and inflation is being felt across all industries, from construction to services.
According to our research, business owners’ top five concerns were:
- Energy costs
- Inflation
- Interest rates
- Materials supply
- Cash flow
How the sectors have fared
After the highs of 12 months ago, the Manufacturing and Engineering sector – as in July 2022 - again saw the most significant fall in sentiment and is now at a lower level than Transport and Haulage for the first time since April 2020, just a month after the first lockdowns were announced.
Appetite for investment
The one positive is that, overall, three quarters of UK firms are still looking to seek funding for investment in the next 12 months, up from 67% in July. This is reflected across all key sectors, with the most notable rise coming in Services, where the number of firms planning to seek funding has risen by 32%.
Missed opportunities
The number of companies missing business opportunities due to a lack of available finance continues to rise, with four in 10 (Feb: 37%) admitting to having lost out.
With pressure on cash flow, most ambitious businesses rely on additional finance to enable them to invest in growth.
Economic outlook
Business owners are, unsurprisingly, more negative than positive about the macro-economic outlook and it’s this indicator that has contributed most to the decline in the overall BSI; for example, in November 2021 75% of respondents were positive about the economy – by December 2022 this has fallen to just 37%.
Predicted business performance
Predictions about future business performance is largely unchanged, with the majority expecting their prospects to remain unchanged. The most notable drop in positivity is the Print and Packaging sector where only 19% of firms polled expect to expand, compared to 34% in July 2022.
Score calculation*
The BSI is based on the views of 900 business owners and senior members of the UK’s business community and calculated from data charting their:
- Appetite for investment in their business in the coming 12 months
- Access to finance and whether they’ve missed a business opportunity through lack of available finance
- Views about the UK’s economic outlook
- Thoughts on their likely performance in the coming 12 months
