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Business confidence indicates slow second half of 2010

A business confidence monitor from The Institute of Chartered Accountants in England and Wales (ICAEW) has echoed dealer views that the second half of this year will be slow.

Confidence among businesses has fallen according to the latest ICAEW/Grant Thornton UK Business Confidence Monitor (BCM), indicating that the economic recovery will slow in the second half of 2010.

Despite uncertainty as to the impact on the recovery of the coalition Government’s plans to reduce public spending, the BCM’s financial performance indicators suggest that the financial health of UK businesses continues to improve.
Key findings for Q3 2010 include:-

  • The Business Confidence Index (BCM) has declined since Q2 2010. It fell from +25.5 to +21.5, a fall of four points.
  • Nearly a fifth (19%) are now less confident about the coming year – up from 14% in Q1 2010.
  • Despite this, turnover and profit growth returned to positive territory for the first time since the start of 2009. Growth of 1.6% and 1.7% respectively are reported for the year to date.
  • Businesses expect to increase prices by only 0.9% in the next twelve months which points to limited inflationary pressures and no need for interest rate rises for some time.

Michael Izza, chief executive officer of ICAEW, said: “UK businesses that came through the recession are now facing the challenge of surviving the recovery.

“They still don’t know what the future holds and are uncertain about how the mood of fiscal austerity will impact the economic recovery. The Government needs to deliver on its commitment to ensure Britain is open for business while taking the tough decisions required to tackle the deficit.”

Scott Barnes, chief executive officer of Grant Thornton, said: "There is a mixed picture for business across the UK's regions and some sectors continue to struggle more than others.

“Clearly economic conditions remain tough but there are signs that some companies are looking to switch from short-term survival measures to opportunities for growth. The recession has changed the business landscape and the measures businesses have taken to survive may make them stronger as the recovery begins to take hold."

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