“Business confidence fell to its lowest level in more than a year last month amid growing fears that inflation poses a long-term threat to company sales,” said the UK Times in its latest news during early Tuesday morning in Asia.

“Confidence among companies is now at levels last seen in April 2021, when coronavirus restrictions were beginning to relax, according to the index by BDO, the accounting and business advisory firm,” the news adds.

It’s worth noting that the sentiment gauge takes a weighted average of the UK’s main business surveys, covering responses from about 4,000 companies, per the UK Times.

Key findings

BDO’s optimism index fell for a second consecutive month in May, dropping by 4.82 points to 101.93. The 100 mark separates expectations for long-term growth from contraction.

The decline was driven by a fall in optimism in the services sector, which has been the hardest hit by falling consumer spending in light of the squeeze on household budgets.

The index for optimism in services fell by 5.35 points to 100.95 in May. Output also fell to its lowest level in more than a year, dropping by 1.86 points in May to 100.53.

The figures reflect official data on output published by the Office for National Statistics yesterday, which showed that the UK economy contracted for the second consecutive month in April, raising fears of an outright fall in output in the second quarter.

Also read: GBP/USD nosedives to a fresh two-year low around 1.2100s on expectations of a Fed 75 bps hike

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