Business optimism has crashed to its lowest level since September 2012 when the UK was facing a double-dip recession.
The monthly Optimism Index, by accountants and business advisors BDO LLP, "plummeted" from 99.79 in February to 96.10 in March. It's the worst monthly fall since November 2008, following the start of the financial crisis. BDO said that confidence is now weaker than its previous low point following the UK's vote to leave the EU in 2016.
The services sector, which accounts for 80% of the UK economy, was the biggest factor in the overall decline in confidence with the index falling 4.15 points to 95.13.
Despite the plunge in confidence, business output held steady at 98.74 in March. BDO said it suggests the economy is performing better than expected given the challenges of the domestic political environment and the gloomy global business outlook. While output growth is in positive territory, it remains below the average growth trend of 100 and is no doubt inflated due to well-documented stockpiling at an all-time high.
Peter Hemington, partner at BDO LLP, said: "Continued uncertainty about Brexit has led to a severe worsening of expectations about our near economic future. What we're now seeing is a sudden realisation that a no-deal Brexit is both a real and imminent possibility.
"With optimism at levels last seen when we just avoided a double-dip recession in 2012, UK businesses expect a zero-growth economy as the backdrop to their plans. This matters, because worried businesses don't hire or invest, creating the conditions for a marked downturn.
"Looking on the bright side, most businesses are not unhappy with current trading. If the fear of no deal can be lifted, we should hope for a quick return of confidence, and perhaps even a "no-deal averted" bounce in the economy. Let's hope our politicians can deliver this."