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Business confidence falls to 20 year low

BDO’s optimism index has shown record lows in UK business confidence for August despite Government efforts to boost the economy through spending cuts.

Confidence last month fell from 93.1 points in July to 89.1 in August according to BDO’s index, which reflects the lowest levels of optimism seen since 1992 when the firm began collating figures.

Peter Hemington, partner at BDO, commented: “The sluggish economic environment continues to elicit zigzagging business sentiment, with confidence now at its lowest level since Business Trends began nearly 20 years ago.

“The Government’s efforts to cut current spending may not be working out quite as planned, though we believe that the strategy in essence remains correct.

“But we have long been concerned that the cuts to investment spending were too drastic and that steps to redress this have been taken too slowly.

“We welcome positive signs that the government now wishes to boost its investment in UK infrastructure.”

Service sector companies suffered the most significant decline down to 91.3 points, while manufacturers reported the lowest confidence levels since March 2009, which fell to 80.5 points as a result of poor growth in goods.

BDO’s figures are a key indicator for output growth across sectors, and the figures released on Monday suggest “an increased likelihood of further economic declines into the beginning of 2013”.

This was posted in Bdaily's Members' News section by Miranda Dobson .