Pessimism about the economic outlook in the UK has sharply increased following the historic vote to leave the European Union, a new survey shows.
The number of businesses pessimistic about the economy over the next year jumped to 49 percent in the week after the referendum, up from 25 percent prior to the vote known as Brexit, according to a survey published Tuesday by YouGov and the Centre for Economics and Business Research (Cebr).
“These figures show what is happening on the ground and they suggest a significant shock reaction,” Cebr Director Scott Corfe said.
“Not only are businesses feeling much more pessimistic in general about the state of the economy, but their own expectations for domestic sales, exports and investments over the next 12 months have gone off a cliff,” he added.
Britain’s decision to break away from the 28-nation bloc has plunged the country into political chaos, prompted a sharp drop in sterling and created deep uncertainty about future trade terms with the EU.
Many economists believe Brexit will trigger recession. Bank of England Governor Mark Carney has already warned that the economic outlook has “deteriorated.”
Carney said the bank would likely need to provide more stimulus to the economy in order to help it cushion the Brexit blow.
The survey of 1,000 British-based companies also showed slightly more than a quarter of business owners were pessimistic about their own business outlook, up from 16 percent before the June 23 referendum.
A member of the European Central Bank Governing Council warned over the weekend that the UK would face inflation and recession following the vote to withdraw from the EU.