Business confidence crashes to lowest point since 2012

08 April 2019

  • Business sentiment weaker than post-referendum low
  • Worst monthly drop in optimism index since November 2008
  • Business output growth steady, but artificially-inflated by record stockpiling

Business optimism has crashed to its lowest level since September 2012, when the UK economy was battling to fight off a double-dip recession, according to a new report from accountants and business advisors BDO LLP.

BDO’s Optimism Index, which shows how businesses expect output to develop in the next three to six months, plummeted to 96.10 in March from 99.79 in February. The report registers the worst monthly drop in the optimism index since November 2008, during the dark days after the fall of Lehman Brothers. In absolute terms, sentiment is now weaker than its previous low point after the UK’s vote to leave the EU in 2016.

The services sector, which comprises around 80% of UK GDP, drove the overall decline in confidence with the sector index falling by a dramatic 4.15 points to 95.13 in March.

Despite the plunge in optimism, BDO’s Output Index, which measures UK business output growth, held steady at 98.74 in March, up 0.42 from 98.32 in February. This suggests the economy is performing better than expected given the challenges of the domestic political environment and the gloomy global business outlook. While output growth is in positive territory, it remains below the average growth trend of 100 and is no doubt inflated due to well-documented stockpiling at an all-time high.

Commenting on the BDO Business Trends Report’s findings, Peter Hemington, Partner at BDO LLP, said:

“Continued uncertainty about Brexit has led to a severe worsening of expectations about our near economic future. What we’re now seeing is a sudden realisation that a no deal Brexit is both a real and imminent possibility.

“With optimism at levels last seen when we just avoided double dip recession in 2012, UK businesses expect a zero-growth economy as the backdrop to their plans. This matters, because worried businesses don’t hire or invest, creating the conditions for a marked downturn.

“Looking on the bright side, most businesses are not unhappy with current trading. If the fear of no deal can be lifted, we should hope for a quick return of confidence, and perhaps even a “no-deal averted” bounce in the economy. Let’s hope our politicians can deliver this.”

To download BDO’s New Economy report and find out more visit www.neweconomy.bdo.co.uk.


Overview of the BDO indices:

An overview of all four indices is provided in the table below, detailing figures for the last three months and the same month of the previous year, to allow for comparison.

  March 2019
(figures for this report)
February 2019 January 2019 March 2018
(equivalent report last year)
BDO Optimism Index 96.10 99.79 99.98 102.26
BDO Output Index 98.74 98.32 97.24 100.05
BDO Inflation Index 98.17 97.41 98.23 98.73
BDO Employment Index 113.92 113.99 115.11 112.09

Note to editors

Accountancy and business advisory firm BDO LLP provides integrated advice and solutions to help businesses navigate a changing world.

Our clients are Britain’s economic engine – ambitious, entrepreneurially-spirited and high growth businesses that fuel the economy. 

We share our clients’ ambitions and their entrepreneurial mind-set. We have the right combination of global reach, integrity and expertise to help them succeed. 


BDO LLP operates in 18 offices across the UK, employing 3,500 people offering tax, audit and assurance, and a range of advisory services. BDO LLP has underlying revenues of £428m and is the UK member firm of the BDO International network.

BDO’s global network

The BDO global network provides business advisory services in 162 countries, with 74,000 people working out of 1,500 offices worldwide. It has revenues of $8.1bn.

Methodological notes

The BDO Monthly Business Trends Indices are prepared on behalf of BDO LLP by the Centre for Economics and Business Research ltd., a leading independent economics consultancy. Cebr has particular strengths in all forms of macroeconomic and market forecasting for the UK and European economies and in the use of business survey techniques.

The indices are calculated by taking a weighted average of the results of the UK’s main business surveys. It incorporates the results of the quarterly CBI Industrial Trends Survey (and the CBI Monthly Trends Enquiry which is carried out in the intervening months); the Bank of England Agents’ summary of business conditions; and the Markit/CIPS Manufacturing and Services PMI data

Taken together the surveys cover over 4,000 different respondents from companies employing approximately five million employees. The respondents cover a range of different industries and a range of different business functions. Together they make up the most representative measure of business trends available.

The surveys are weighted together by a three-stage process. First, the results of each individual survey are correlated against the relevant economic cycles for manufacturing and services. This determines the extent of the correlations between each set of survey results and the relevant timing relationships. Then the surveys are weighted together based on their scaling, on the extent of these correlations and the timing of their relationships with the relevant reference cycles.

Finally, the weighted total is scaled into an index with 100 as the mean, the average of the past two cyclical peaks as 110 and the average of the past two cyclical troughs as 90.

The results can not only be used as indicators of turning points in the economy but also, because of their method of construction, be seen as leading indicators of the rates of inflation and growth.


Paul Wyatt
at Teneo on behalf of BDO LLP

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