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Worries over Brexit uncertainty

Mitie shares plunge amid bank confidence warning

mitieShares in outsourcing company Mitie crashed by 26% after it warned that profits will be “materially below” expectations as a result of uncertainty over the UK’s decision to leave the EU.

In a trading update ahead of its half-year results, the firm said some clients were deferring investment decisions.

The company’s comments coincided with a survey from Lloyds Bank which reported that business confidence is at a four-year low.

Mitie also noted lower UK growth rates, changes to labour laws and public sector spending cuts and warned that it would set aside £10n for job cuts in the year to the end of March.

In a statement, it said: “While we have seen some positive trends and contract awards in the year to date, it is our expectation that the pressures we are facing in our markets will impact our trading results during this financial year ending 31 March 2017, most significantly in the first half.

“When compared to the same period last year, in the first half we expect revenue to be modestly lower and operating profit to be very significantly lower.”

According to the latest Business in Britain report from Lloyds Bank, the most commonly identified threat by UK companiea in the next six months was economic uncertainty (27%), closely followed by weaker UK demand at 18%.

The report, now in its 24th year, gathers the views of more than 1,500 UK companies, predominantly small to medium sized businesses, and tracks the overall “balance” of opinion on a range of important performance and confidence measures, weighing up the percentage of firms that are positive in outlook against those that are negative.

Tim Hinton, an SME banking executive at Lloyds Banking Group said: “Business confidence has taken a hit since our last report in January, but this should be viewed in the context of the recent economic and political shocks.

“The EU referendum vote has introduced a level of uncertainty for companies as the UK decides on the best model for its future relationship with the EU, and this is likely to continue for the foreseeable future.

“Whilst sentiment has fallen to a four-year low, it remains well above the lows reached during the global financial crisis of 2008/9.”

The survey is more pessimistic than a number of other recent polls which have shown a degree of resilience to the Brexit vote.

 



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