Business man
Business confidence has fallen to its lowest level in three years, according to the latest survey by accountants and business advisers BDO.

The index, which looks at confidence growth in the next six months, fell back to its benchmark of 100. Any figure below that indicates that respondents believe that output growth will fall below the long-term trend.

BDO said business that had been resilient to global economic concerns are now starting to suffer from American and Chinese headwinds. It added that the EU referendum, expected to take place in June, is creating even more uncertainty for businesses, causing them to consider their long-term prospects.

The survey found the manufacturing sector to be having a particularly downward effect on business confidence. BDO said its index for output fell to 94.7, below the 95 mark that indicates contraction.

Peter Hemington, partner at BDO, said: "Global headwinds are finally hitting business confidence and the added uncertainty of EU referendum just around the corner is fuelling concerns.

"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. For instance, one small but helpful thing that the government could do would be to introduce a zero rate of VAT on companies that supply to exporters as currently happens in Ireland. This would boost UK manufacturing and encourage more trade abroad."