Business confidence in Yorkshire slumped during the last quarter and has not recovered since, according to the latest ICAEW/Grant Thornton Business Confidence Monitor.
The report said the threat of steel plant closures across the region is likely to be contributing to uncertainties, while wider issues such as the upcoming EU Referendum and economic conditions continue to hit business sentiment.
A business confidence index score of +5.5 was recorded this quarter, which is significantly lower than +22.9 recorded a year ago.
Domestic sales continue to outstrip export sales increases and firms are reporting employment growth of 2.4 per cent over the last 12 months.
Chris Manners, Yorkshire and Humber ICAEW Regional Director said: “Business confidence is fragile and the upcoming EU Referendum is likely to be undermining business confidence.
Furthermore, with the introduction of the Living Wage, the Apprenticeship Levy and continuing cuts and austerity it is not surprising that confidence continues to remain low in the region. The next quarter could certainly be decisive in terms of a return to a trend for growth and the economy moving forward.
“Problems with the steel industry are an additional factor contributing to negative business sentiment, particularly in South Yorkshire.”
Mark Overfield, partner at Grant Thornton in Yorkshire, said: “Although the latest monitor reveals that business confidence remains fragile, we believe that there is much to be optimistic about in the region.
“Our research shows that the UK has an untapped business potential to the tune of £469bn. In Yorkshire and Humberside, that figure is £60bn.”