The UK has seen its first fall in business confidence in two years as companies are not fully convinced the country is heading in the right direction.

The confidence monitor from ICAEW/Grant Thornton latest reading is 32.3, which is down from 37.3 during the second quarter of 2014. The news comes as the Bank of England’s Monetary Policy Committee (MPC) are set to vote on interest rates later on in the week.

Stephen Ibbotson from the ICAEW said: “Businesses are becoming more realistic about the future. he imbalances in our economic recovery that were masked by rising confidence continue to persist – our exports remain weak, and investment isn’t maintaining momentum. We look to the Bank of England and the Government to work harder to ensure that the recovery is placed on a broader footing before we see this still relatively high optimism erode away.

The confidence monitor has been taking readings since 2005. Unsurprisingly it saw its lowest level of -45 during the 2009 financial crisis. Ever since the second quarter of 2013, it has been continuously rising reflecting a cautious optimism among businesses.

While this drop is far from a positive result, confidence is still in the positive meaning not all hope is lost. It seems more likely that businesses are wary of the future.

On Thursday, the MPC will vote on whether to rise interest rates from their historical low of 0.5%. No one has voted for an increase since July 2011, although some are expected two members, Martin Weale and Ian McCafferty, will buck that trend.

Image by photoloni.