Partner Article

Business confidence remains unsettled

UK business confidence is at its lowest point this year, according to the latest Business Trends report by accountancy and advisory firm BDO LLP.

BDO’s Optimism Index shows confidence has fallen for a fifth consecutive month, following a brief spell of optimism in Q1 2012.

Confidence in the manufacturing sector belied the overall results, as it improved substantially in July from 83.8 points in June to 90.5.

BDO suggest the increase of 6.7 points, the highest monthly rise since February 2011, could be due to the manufacturing sector diversifying exports; with 50% of its trade now outside of the erratic eurozone.

Service sector confidence declined in July, falling 2.1 points to 93.8. The dip follows consistent increases between February and May, demonstrating the unsettled nature of confidence levels.

Peter Hemington, Partner, BDO LLP, commented: “This month’s figures serve as a stark reminder of the continuing difficulties the UK economy faces, with zigzagging business confidence undermining the improvement in confidence that we saw at the start of 2012.

“Where there is cause for cautious optimism is in the revived confidence in the manufacturing sector. The sector should be applauded for taking a pragmatic and adaptable approach to diversify exports away from the volatile eurozone. ONS figures in July showed that for the first time more than 50% of the UK’s goods went to countries outside the eurozone.

“Other UK businesses could look to emulate this tactic - opportunity costs, and it may be that their money is better spent marketing elsewhere, looking to the BRICs, CIVETs and the so-called Next 11. In that vein, the Government’s initiative to use the Olympic Games as an opportunity to discuss trade and investment with a variety of Heads of State in a series of summits is laudable.”

This was posted in Bdaily's Members' News section by Tom Keighley .