Wednesday 16 October 2019

A global economy 'on brink' hits confidence in EU and UK

UK manufacturing is weighing down on economy says BDO. Photo: PA
UK manufacturing is weighing down on economy says BDO. Photo: PA

Colm Kelpie

Investor confidence across the Eurozone has hit a 10-month low with the global economy now "on the brink".

And UK business confidence has hit a three-year low, even though the British economy continues to grow.

An indicator monitoring sentiment across the 19-member bloc has fallen for the second month running, the lowest level since April of last year.

The Sentix Economic Index warned that the global economy was now "on the brink", led by a downturn in the United States.

It said investors believed the interest rate hike by the Federal Reserve in December couldn't have come at a worse time and that the loss of momentum over the last two months was "breath-taking".

"The US economy is on the verge of a downturn," it said. "The big picture hasn't changed at all," the Index warned.

"The global economy is on the brink as none of the regions covered by the sentix are sending signs of hope.

"Particularly battered are the regions of Latin America and Eastern Europe."

Meanwhile, a separate survey showed that business optimism among British companies has fallen to a three-year low, with Brexit fears adding to the gloom.

The business optimism index from consultancy firm BDO - which predicts growth for six months ahead - fell to 100 for the first time since 2013. BDO said the findings come following a challenging start to the year for the global economy.

The UK, it said, had previously been resilient to global economic fears, but headwinds from the American and Chinese economies and turmoil in the Middle East are finally starting to take their toll.

"Global headwinds are finally hitting business confidence and the added uncertainty of an EU referendum just round the corner is fuelling concerns," said Peter Hemington, BDO partner. "So far the government has done a good job in sheltering the UK economy from global storms but there is more that could be done."

BDO said the poor performance of the manufacturing sector continues to weigh down the UK economy in the short term.

"The impending referendum on the UK's membership of the EU - expected as early as June - is fuelling further uncertainty for UK businesses looking at their long-term prospects."

Irish Independent

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