LONDON (Reuters) - Business leaders’ confidence in the British economy has sunk to its lowest level in more than 18 months as the risk of a no-deal Brexit in a little over three months grows, the Institute of Directors (IoD) said on Thursday.

FILE PHOTO: Rain clouds pass over Canary Wharf financial financial district in London, Britain July 1, 2016. REUTERS/Reinhard Krause

The group, which represents business directors and leaders, said its confidence tracker briefly reached positive territory earlier this year when there was agreement on a Brexit transition period, but had fallen steadily since April and hit its lowest level this month.

Prime Minister Theresa May faces deep opposition from both her own lawmakers and opposition parties to the divorce agreement she has negotiated with the EU, raising the risk of a “no-deal” departure, something that could hurt the economy.

IoD senior economist Tej Parikh said there was no doubt that the tumultuous Brexit process was having a damaging impact on firms’ outlooks.

“Business leaders are looking ahead to the new year with trepidation about the economy,” he said.

“While we saw cautious optimism emerging when the Brexit talks appeared to be moving towards a transition period after March 2019, that has utterly dissipated now.

“The prospect of a no-deal in the near future will be weighing heavily on directors’ minds.”

Business investment has fallen for three consecutive quarters, official figures showed earlier this month, and other recent data has pointed to a slowdown in growth ahead of Britain’s exit from the European Union in 93 days.

The IoD said, however, that while business leaders were pessimistic about the economy, confidence in their own firms remained relatively upbeat.

Optimism levels for the wider economy stood at -38 percent in December, it said, but the corresponding level for respondents’ own companies was +30 percent, little changed from 31 percent a year ago.

The IoD said 724 business leaders contributed to the survey in December.