Optimism among business bosses on the up but manufacturing slows

Optimism among some of the UK’s most powerful chief financial officers (CFOs) has continued to recover from post-referendum lows as doomsday predictions about Brexit's impact on the economy fail to materialise.

Some 130 CFOs from companies listed on the FTSE 350, Britain's 350 largest companies, took part in Deloitte's latest confidence survey, representing 91 companies worth a combined £376bn.

The survey was carried out shortly before Theresa May triggered Article 50 to begin the process of the UK leaving the EU, and found that 31% of CFOs felt more optimistic about the future of their businesses than they did three months ago.

That marked a 4% increase compared to the end of 2016, and a 28% increase compared to the immediate aftermath of the referendum.

But David Sproul, senior partner and chief executive at Deloitte, said the "long and uncertain process" of the Brexit negotiations means that business sentiment will remain changeable.

"It is clear from this survey that the UK corporate sector enters the negotiation phase of Brexit in far better spirits than seemed likely in the months after last year's referendum vote," he said.

"Businesses will hope that the UK can secure the best possible deal on trade and market access, but must continue to plan for an exit in 2019, several years of trade negotiations, and a transitional phase to bridge the two."

Manufacturing figures released on Monday also showed that Brexit volatility may still have an impact on the British economy.

The sector's purchasing managers' index (PMI), compiled by Markit (NasdaqGS: MRKT - news) and the Chartered Institute of Procurement & Supply (CIPS), is a key marker which measures growth, and indicated a slowdown in March as rising inflation begins to bite on consumer goods.

The PMI (Other OTC: PMIR - news) registered a score of 54.2, down from 54.5 in February and below expectations of 55.0, making it the weakest pace of growth in eight months.

Duncan Brock, director of customer relationships at CIPS, said: "Despite the confident mood, the depreciation in sterling which has supported exporters has come at a price.

"The reduced buying power of the pound has led to the 11th consecutive rise in input costs with consumers feeling the effects in the form of higher prices on the high street."