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Mood in UK services firms sours ahead of Brexit - CBI

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Mood in UK services firms sours ahead of Brexit - CBI
FILE PHOTO: The Canary Wharf financial district is seen from the Broadway development in central London, Britain, August 23, 2017. Picture taken August 23, 2017. REUTERS/Hannah McKay/File Photo   -   Copyright  Hannah Mckay(Reuters)
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LONDON (Reuters) – Gloom deepened across the services companies that dominate Britain’s economy in November and firms continued to hold back on investment ahead of Brexit, a survey showed on Thursday.

Business optimism fell to its lowest level in two years for business and professional services firms, which represent the biggest chunk of the services sector, the Confederation of British Industry said.

Confidence at consumer-facing firms like hotels and restaurants also declined, the CBI’s quarterly survey showed.

Britain’s economy grew strongly over the summer, fuelled by consumer spending during a hot summer and the soccer World Cup, but the CBI’s report fits with other gauges that suggest the economy is slowing through the final months of 2018.

The survey of 178 services companies was conducted between Oct. 26 and Nov. 14. That was before Prime Minister Theresa May agreed a Brexit divorce deal in principle with the European Union and lost two of her cabinet ministers — part of a broad show of opposition to her plans from her Conservative Party.

“Brexit uncertainty continues to take its toll on the UK’s services firms. Volumes and profitability are under pressure, and optimism about the business situation is falling across the sector,” CBI chief economist Rain Newton-Smith said.

“Services firms expect to be operating in a challenging environment over the next quarter and beyond, with demand set to weaken in the coming three months and firms seeing little prospect of expanding their businesses in the year ahead.”

The IHS Markit/CIPS monthly report on services firms, a closely-watched gauge of the economy, is due on Monday.

(Reporting by Andy Bruce; Editing by Kirsten Donovan)

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