This site uses cookies to provide you with a more responsive and personalised service. By using this site you agree to our use of cookies. Please read our privacy statement for more information on the cookies we use and how to delete or block them.

On eve of Brexit vote business confidence hits two-year low

14 January 2019

--BDO's Optimism Index shows that business confidence has fallen to lowest level since December 2016

--UK business output continues to fall, reaching five-month low

On the eve of Parliament’s vote on the Prime Minister’s Brexit deal, new data from accountants and business advisors BDO LLP shows business confidence has fallen to its lowest level since December 2016 with output also stagnating.

BDO’s Optimism Index, which measures UK business confidence, fell by 0.17 points to 100.16 - its lowest level in two years - when the UK business community was dealing with the initial reaction following the EU referendum result.

Following a short-lived resurgence in summer 2018, BDO’s Output Index, which measures UK business output growth, fell by 0.49 points to 97.20 in December. This was driven in large part by the manufacturing sector, which experienced a decline for the third consecutive month, plummeting below the industry’s long-term growth trend for the first time since November 2017. At 98.60, the manufacturing sector now sits 4.66 points beneath its September 2018 level. 

Early data from Q4 suggests that the partial recovery of manufacturing during the summer was a transitory phenomenon, and the slowing economic growth of major trading partners - including the EU and China - as well as the continued uncertainty surrounding Brexit are weighing on the sector’s performance.

The services sector, which accounts for around 80% of the UK’s economic output, also declined in December and looks set to be hit by a further slowdown in consumer spending and investment as firms and households demonstrate caution with Brexit on the horizon.

It is not all bad news however. UK employment levels continue to defy gravity, climbing to their highest level since records began. The number of people in work in the three months to October 2018 was 79,000 higher than during the previous three-month period, with BDO’s Employment Index, which tracks businesses hiring intentions, rising by 0.59 points to 115.24. These findings suggest that the UK labour market has not run out of steam, despite the slowing economy and ongoing preoccupation with Brexit.

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

“Although the UK’s employment figures continue to rise at an impressive rate, businesses continue to feel uneasy about the rapidly approaching Brexit deadline, signaling that job growth is unlikely to last.

“With a vote on Theresa May’s Brexit plan taking place tomorrow, we are hopeful that Parliament will prevent the UK from considering a no-deal exit from the EU, and will instead address major business concerns such as the talent drain that may result. Taking steps to reinstate the two-year post-study work visa to help address the manufacturing and tech skills shortage would be a solid place to start.”

To download BDO’s New Economy report and find out more visit  

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.


December 2018

(figures for this report)





December 2017

(equivalent report last year)

BDO Optimism Index





BDO Output Index





BDO Inflation Index





BDO Employment Index





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 Blue Rubicon on behalf of BDO LLP
Mob: 07850 656712
Tel: 0207 260 2700
Email: [email protected]