U.K. Companies See Fastest Pickup in a Year as Expectations Rise

  • Manufacturers, retailers and services firms see improvement
  • CBI says longer-term concerns linger on Brexit uncertainty

Businesses expect Britain to end the year on a high, with improvements in manufacturing, retail and services spurring the fastest pickup in more than a year.

Companies’ expectations for output in the fourth quarter rose to 22 in September, the Confederation of British Industry said in its monthly “growth indicator” report released on Sunday. That’s the highest since September 2015. Even so, it sounded an alarm about longer-term prospects, with sentiment and investment intentions likely to remain “subdued.”

“Firms are confident that autumn will bring a surge in activity,” said Rain Newton-Smith, chief economist at the CBI. “With businesses keen to build momentum for the rest of the year and into 2017, they want the government to outline clear plans for negotiations to leave the European Union.”

Recent data show the U.K. economy has been stronger than expected in the aftermath of Britain’s vote to leave the EU. Still, the CBI said firms were more cautious on the longer-term economic outlook, with business decisions likely to be delayed.

“Firms’ optimism about general business conditions have deteriorated sharply, falling at rates last seen during the height of the euro zone crisis at the end of 2011, and in some cases during the 2008/9 recession,” the group said, citing its survey data. “While sentiment might recover to some degree as further details emerge of the government’s plans and timing for the Brexit negotiations, it is likely to remain subdued.”

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