Consumer confidence has declined since the Brexit decision was taken while business confidence is also down sharply, according to the latest economic assessment from the Agricultural and Horticultural Development Board (AHDB).
As measured by the CBI, consumer confidence has fallen by 1.7 points while the decline in business confidence is equivalent to 5 points, moves which in each case results in “consumers delaying major purchases and businesses delaying major investment decisions”.
“This results in a slowdown in growth, which further fuels uncertainty,” said AHDB, adding that growth forecasts have already been downgraded from a healthy 2.5% for 2017 to just 0.4%, with some commentators feeling the UK could be headed for recession.
Compiled by AHDB senior analyst, Sarah Baker (pictured above), the assessment also includes the comment, however, that it’s not all “doom and gloom”.
“Sterling’s weakness (since the Brexit vote) does create opportunities for UK exporters to undercut European rivals in world markets,” she said. “In addition, while our trading relationship with the EU will not be clear until negotiations are completed, the UK is, in the meantime, still part of the single market and opportunities within this market are also greater, due to UK goods being relatively less expensive than goods priced in Euros.
“It’s also still cheap to borrow, with interest rates not expected to rise in the foreseeable future. Indeed, a cut in interest rates is widely predicted before the end of the year.
“With a new Chancellor of the Exchequer, the government’s main priority of reducing the budget deficit appears to have been given lower priority, and early indications suggest that a more expansive stance on government investment may prevail, in an attempt to offset low private investment.
“This means further spending cuts and tax rises may not materialise, or may not be as extensive as previously expected, in the autumn statement. If this does occur, the result will be an increase in disposable income for consumers, which may well offset some of the impact of the drop in consumer confidence.”
