Company Confidence Dropping

Business confidence has plummeted by a record amount as fears persist the economy is set to contract in the final quarter this year.

The BCM Confidence Index collapsed from +8.1 in the third quarter to -9.7, according to the latest figures.

The index is now at its lowest level since the 2009 recession, fuelling concerns the economy will shrink by some 0.2% in the final quarter.

This would mean that the growth for 2011 would end up at 0.9%, far short of the 1.7% predicted early in the year.

The index revealed confidence across all business sectors has fallen, with just energy, water and mining remaining in positive territory at +2.3.

The property sector is in the weakest position with confidence tumbling to -18.7, followed by banking, finance and insurance with -14.6.

Michael Izza, Chief Executive of ICAEW, said, "In the first nine months of the year, businesses have played their part in supporting economic growth.

"Many are proud of their success against a backdrop of a very slow and protracted recovery. Yet they are becoming increasingly worried about the immediate outlook and the risk of a double dip recession.

"They are looking to the Government which now needs to take urgent steps to restore business confidence and to show that it understands the need to rapidly change the mood that the business community clearly feels."

Turnover and profit growth expectations have now declined for two successive quarters, which has been compounded by a steep drop in capital investment growth expectations.

In total, more than 60% of UK companies are operating below capacity with the number of new employees expected to increase by just 0.9% as companies refrain from taking on new staff.

Grant Thornton CEO, Scott Barnes said, "The extent of negative sentiment in underlying business performance indicators, with confidence dropping across the UK's regions and sectors, is worrying.

"Where they can, businesses need to make the most of opportunities in growing Asian and BRIC economies to maintain demand and safeguard future growth while keeping a close eye on cost and efficiency."

Posted at 03:37PM Nov 10, 2011 by Marc Stenton in The Economy  |  Comments[0]