UK business morale slumps as Iran war pushes up costs: survey

[LONDON] British business confidence fell to its lowest since 2022 as the Iran war, which pushed up costs, saps expectations for future sales, a survey of accountants showed on Thursday (Jul 2).

The Institute of Chartered Accountants in England and Wales said that ​its quarterly Business Confidence Monitor fell to its lowest since the fourth quarter of 2022 in the three months to June.

“Even if the peace deal holds, the weakening in forward-looking sales indicators points to a difficult second half of the year for the UK economy, as the aftereffects of the Iran conflict continue to weigh on activity,” Suren ‌Thiru, ⁠chief economist at the ICAEW, said.

The fall in confidence was the joint-longest negative streak since the global financial crisis. The drop reflects weaker expected sales activity and rising costs pressures.

Input prices rose to 4.1 per cent in the three months to June, the highest since the July-to-September period in 2024.

Companies said they were struggling to fully pass higher costs on to customers due to weak demand.

Expectations for input cost growth over the coming 12 months rose to the highest level since Q1 2023.

More than half of the firms surveyed were worried ​about labour costs ​and ⁠35 per cent of firms cited concerns about energy prices.

The share of businesses citing transport worries was the highest in over two years.

SEE ALSO

Europe’s biggest office sale in four years boosts London’s Canary Wharf

UK manufacturing activity cools despite stockpiling boost to output, PMI shows

UK defence plan leaves US$6.5 billion hole in Burnham’s first Budget

UK house prices stagnate despite easing mortgage costs

More

About 24 per cent of firms said they were concerned about late payments, the highest proportion in five years.

1,000 accountants took part in ICAEW’s ​survey between April 13 and Jun 19. REUTERS