Business confidence has bounced back after being hit by the Brexit referendum result, according to the latest Business Barometer from regional accountancy firm Bishop Fleming.
However, 56% of business owners remain doubtful about the year ahead and half have no plans to take on additional staff next year.
In another sign of an impending slowdown, a third also expect no increase in sales over the next 12 months.
Bishop Fleming, which has an office in Bath, publishes its Business Barometer quarterly and three months ago, in the aftermath of the EU referendum, 68% of firms said they were concerned over the direction of the economy. The latest figure of 56% is almost back to its pre-Brexit level of 54%. 
Managing partner Matthew Lee, pictured, said: “The vote for Brexit hit business confidence. And although it has bounced back, uncertainty continues to affect recruitment decisions.
“Such decisions are made even more difficult by Brexit potentially deterring skilled overseas workers from coming to the UK, as well as this country’s general lack of investment in training and development to reduce the skills gap.
“Firms also remain worried about the Living Wage and forthcoming apprenticeship and migrant skills levies.”
He said consumer demand was undoubtedly knocked by Brexit, and certain industry sectors continue to struggle.
“This is concerning where staff costs are rising and margins are squeezed because volumes cannot be raised or prices increased. This suggests there could be a rise in business insolvencies next year and in 2018.”
However, mirroring the recovery of business confidence, 65% of those responding to the survey confirmed they were now planning an increase in investment in their business in the next 12 months – a small rise on the pre-Brexit survey figure of 57%.
Mr Lee added: “This small rise in investment intention is encouraging, though we have seen some scaling back of capital spending. I remain concerned that firms are not investing enough for the future, particularly when borrowing costs remain at record lows.”
Firms trading overseas revealed an increased expectation of improved business (40%) compared with the pre-Brexit position (35%). However, three out of five companies expect the fall in the pound’s value against major currencies to have a negative effect on their trade.
“The fall in the value of the pound has made UK goods and services cheaper for overseas customers, but it creates price inflation for imports. We do need our companies to think big and start to export more,” said Mr Lee.
“I remain concerned over the slowing Chinese economy and the massive debt problems in the Eurozone and how these factors will impact on our trade. We have also yet to understand the effects on the UK economy of a Trump presidency and his stated aim of substantially reducing tax rates; which could put the UK and US in direct competition with each other for attracting new investment.
“Overall the survey reveals that while there has been some bounce back in confidence and a greater willingness to invest, business sentiment remains fragile.”
The survey was conducted before last week’s Autumn Statement.
