Optimism among UK small manufacturers sees sharpest fall since 2009

Business optimism among the UK's small and medium-sized manufacturers suffered its biggest drop since the height of the global financial crisis as a result of the uncertainty created by the Brexit vote, a fresh survey has revealed.

The Confederation of British Industry's SME trends poll showed that 53% of firms were less optimistic in the three months to July period, while only 8% were more optimistic.

The balance of -44% is the biggest drop recorded in the survey since January 2009.

The survey of 472 firms across the UK revealed that output and new orders were broadly flat in the July quarter, but manufacturers expect both to drop in the coming three months.

"The UK's SME manufacturers reported higher production, more staff hired and now expect to sell more of their world-class goods overseas over the next quarter, with a weaker sterling having a hand in this," CBI director for economics Rain Newton-Smith said.

"But overall they do feel less optimistic and are scaling back some investment plans in machinery and plants.

"Naturally, much of the concern is related to uncertainty and business wants to now see the new government deliver a clear plan and timetable for the EU negotiations ahead, while cracking on with immediate domestic priorities, including a decision on new aviation capacity in the South East, which will help the UK's SME manufacturers to reach new markets in the future."

Firms were more optimistic over their exports prospects for the year ahead, but the balance of firms saying political and economic conditions abroad could affect their business was at a record high of 49%.

Some 28% of manufacturers said they hired more people than three months ago while 13% said they hired fewer, leaving a balance of 15%.