Confidence among West of England firms has dropped significantly following the vote to leave the European Union, according to one of the first regional surveys conducted since the historic referendum result.
A third of businesses expect sales to flatline over the next 12 months while more than half plan no new recruitment over the same period.
Adding to the troubled outlook, more than two-fifths confirmed a moratorium on any new business investment.
The downbeat findings emerge from the latest Business Barometer Survey conducted by regional accountancy firm Bishop Fleming, which has a large office in Bath.
It said the survey painted a picture of “overall stagnation” in growth prospects in a weak economy.
It reveals that 68% of business owners are now more doubtful about the year ahead against 54% before the vote.
National surveys have revealed a mixed view of the referendum’s impact, with a number showing it has failed to affect investment or recruitment decisions while others have signalled a downturn and a drop in optimism. Unemployment nationally has also continued to fall.
Bishop Fleming managing partner Matthew Lee said: “The vote for Brexit has had a very tangible impact on business confidence, with firms unsure of the UK’s future relationship with the EU.
“Recruitment decisions have been particularly hit by economic worries, on top of new uncertainties over the status of EU workers in the UK, the effects of the new Living Wage, and concerns over forthcoming levies on employers for apprenticeships and migrant labour.”
He said consumer demand had been hit hard, some sectors were struggling and could not raise volumes or prices to meet rising staff and pension costs. He urged Chancellor Philip Hammond to cut the rate of VAT in his Autumn Statement to help boost consumer demand.
“This squeeze on margins will undoubtedly continue for the foreseeable future until the effects of Brexit become clear, with a likely knock on effect on insolvencies,” he warned.
“As growth prospects for the economy have been slashed post Brexit, firms are averse to purchasing new equipment or property at the moment, even though borrowing costs are so low.”
The survey did however reveal one silver lining to the clouds of uncertainty with half the businesses surveyed involved in international trade claiming sterling’s drop against major currencies was a boost for exports.
Mr Lee said: “A fall in the value of the pound makes UK goods and services more attractive to overseas visitors and investors, which is particularly good news for manufacturing and tourism sectors. However, concerns remain over the slowing economies of China and the Eurozone.
“Overall, the survey reveals we are going through a period of adjustment with the UK economy as we wait to see how the Brexit negotiations proceed.
“The Bank of England has recently made clear its direction of travel with the cut in interest rates, but we now urgently need the new Chancellor to ‘reset' the economy to provide the necessary fiscal stimulus. A cut in the rate of VAT would help boost consumer demand.”
Bishop Fleming also has offices in Bristol, Exeter, Plymouth, Torquay, Truro and Worcester.
