 |
|
|
|
© Business-Money.com Ltd 2013 |
|
|
|
Business confidence has deteriorated despite export growth holding up, according to the latest ICAEW/Grant Thornton UK Business Confidence Monitor. This quarter’s index confirms the fragility of the UK economy as companies have not yet come to terms with the implications of such a sustained period of low economic growth. The index stands at +1.1, down from +12.0 in Q2 2012. This is the fourth largest quarterly decline since BCM began. Businesses have revised down their expectations of future turnover and profit growth as domestic demand remains weak. Despite companies having cash, firms expect capital investments to increase by just 1% during the next 12 months – a worrying sign for economic prospects. However, expected export growth during the next year is still broadly at pre-financial crisis levels, meaning an export-led recovery remains a possibility. Michael Izza, chief executive of ICAEW, said: “We have not yet been able to capitalise on the cautious optimism we saw from businesses earlier in the year. As we search for signs that growth is accelerating, businesses are holding back on investing, still nervous about the future. “What is clear is that we have to break the circle and take advantage of the opportunities that are around today. Investment in housing and new infrastructure might just bring the growth and confidence that we need.” The fall in confidence by nearly 11 points implies GDP growth of +0.1% in Q3 2012. This follows the recent ONS first estimate of -0.7% for Q2 2012. Business performance indicators such as expected turnover and profit growth have also both fallen back as companies become more realistic about the economic conditions. Reported growth in selling prices has fallen to its lowest level since Q1 2011 this quarter. This suggests that inflation is unlikely to be a problem for the UK economy during the next few years. Weak demand for goods and services will curb prices, and the Bank of England has already signalled it is worried about inflation falling below its target of 2%. The slowdown in global trade has hit exports, and expected growth has weakened to its lowest level since Q4 2009. Forecast growth in exports remains positive though, with an increase of 3.6% predicted for the next 12 months. This matches the growth rate seen for exports prior to the recession. Firms also have cautious plans to take on new staff. There has been a 0.9% increase in headcount during the past year, and a 1.2% increase is expected during the next 12 months. Other Business Money News
| ||||||||||||||||||||||||
Business
Money delivers news, reviews, research, comment and
analysis to financial intermediaries, bankers, lenders,
and SME decision makers and
supports these finance
professionals with timely, relevant and accurate market
intelligence and sources of business funding.
