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UK business confidence falls to lowest point this year

Despite cautious optimism over the first half of the year from the automotive retail sector, overall UK business confidence has reached its lowest point this year, according to accountants and business advisers BDO.

The latest BDO Optimism Index, which predicts business performance two quarters ahead for all UK businesses, has fallen for the fourth consecutive month from 95.5 in May to 93.5 in June.

This is the lowest reading since December 2011 and for the first time since January takes the Index below the 95 mark that indicates growth.

However, dealers are well prepared for any tough times ahead with the majority already having taken steps during the recession to tighten operations to run as efficiently as possible. Private registration growth of 8.7% over the first half of the year and the ramping up of manufacturer deals over the summer will help to battle the gloom predicted across wider UK industry.

Peter Hemington, BDO partner, said: “The figures point to a tough economic climate for the remainder of the year, possibly beyond.

“As the Eurozone continues to be blighted by instability, the UK government must take steps to ensure the UK economy is not at the mercy of the single market. Since half our export goods go to the Eurozone, it’s not surprising that turbulence there is denting longer-term growth prospects here.

“A cohesive and outward-looking approach is needed to ensure we exploit all potential avenues for growth – we would urge the Government to collaborate and look for unexplored trade opportunities, not only within the G20, but also with the developing economies to achieve a coordinated and global response to on-going economic volatility.”

In addition, the short-term UK economic outlook took a knock in June, as the BDO Output Index - which forecasts business conditions in one quarter’s time - fell from 96.7 to 94.8.

This is the single biggest monthly fall in the index since June 2011, reflecting the rapidly weakening short term economic outlook and comes shortly after lower than expected GDP figures for Q4 2011 and Q1 2012 were unveiled. The BDO Output Index highlights the on-going threat to growth that the UK faces for the back end of the year.


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