Business confidence in UK surges to pre-Brexit levels after Labour win

Uncertainty felt by British business leaders has collapsed to the lowest level since before the 2016 Brexit vote after Prime Minister Keir Starmer's landslide election victory, a survey showed.

The quarterly Deloitte survey of chief financial officers showed 23 percent of large British companies reported high or very high uncertainty, down from 36 percent in the previous survey and the lowest reading since late 2015.

The report also pointed to rising optimism around financial prospects, adding to early signs of a pickup in business sentiment since the July 4 victory for the Labour Party.

"We've seen a significant shift in risk appetite post the general election and the new government's focus on growth and stability is already increasing corporate confidence," Richard Houston, chief executive of Deloitte UK, said.

The findings are likely to be welcomed by finance minister Rachel Reeves, although the Deloitte report also highlighted the challenge she faces in unlocking the private-sector investment which is key to Labour's ambitions of faster economic growth.

Asked about the election result, 21 percent of companies surveyed by Deloitte said it would boost plans for investment, deal-making and hiring, against 11 percent who said it would detract. More than two-thirds predicted little or no change.

Most of the companies surveyed between July 9 and July 19 cited cost reduction as a greater priority than expansion or investment.

A separate report from the online jobs portal Adzuna showed vacancies fell to 852,703 in June, the lowest total since March 2021 and down 19.5 percent from a year ago.

Deloitte's Houston said business leaders wanted industrial strategy to the new government's top economic priority, a call echoed by manufacturing association Make UK.

In its annual "Manufacturing - the facts" report, Make UK highlighted UN Trade and Development data that showed Britain dropped to 12th in the world for annual manufacturing output in dollar terms in 2022, down from 8th in 2021.

"These trends reinforce the need for the UK to react with a long term industrial strategy to take competitive advantage of our undoubted strengths," Verity Davidge, director of policy at Make UK, said.

Business groups criticised the previous Conservative government for a succession of short-lived industrial strategies that were ultimately wrapped into broader economic policies less focused on the manufacturing sector.