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UK business confidence dips again

UK business confidence dips again – but companies are planning for the future, says global survey

Business confidence has fallen for the third consecutive quarter in the UK as uncertainty over the outcome of the General Election and deflationary pressures feed pessimism in the market, according to the latest global survey of finance professionals.

The Global Economic Conditions Survey for the first quarter of 2015, carried out by ACCA (the Association of Chartered Certified Accountants) and IMA (the Institute of Management Accountants) shows that while, globally, senior finance professionals are beginning to sense a recovery, those in the UK are concerned about what they see as a fragile recovery.

The survey, of 120 finance professionals in the UK, shows that businesses here saw a slight dip in new orders in the first three months of 2015 Q1, implying the recovery may not be as strong as some reports have suggested.

However, capital investment has risen substantially in the first quarter in the UK, along with greater investment in staff development which suggests there is confidence in future prospects.

Alan Hatfield, Executive Director – Strategy & Development with ACCA, said: “While there is clearly uncertainty over future prospects, businesses in the UK are continuing to plan and invest in the future , and it will interesting to see how the mood changes following the results of the election. “

On a global scale there are also clear signs that the situation is improving. For the second quarter in a row, senior finance professionals are beginning to believe that a recovery is taking hold.

While the report shows that confidence is at the highest level among Chief Financial Officers since 2011, the recovery is still a ‘work in progress’. For example, while the report showed that capital spending and capital investment had fallen back, globally more money was being invested in staff, and there were signs of growth in employment and new orders.

Globally, respondents were also reporting fewer problems with late payments and fewer had concerns about suppliers or customers going out of business.

The report also showed that CFOs of larger companies were more pessimistic than those working in smaller businesses. This may be because they are more likely to be international, and therefore more likely to be exposed to uneven recovery and economic performance in different markets.

“Confidence is returning to the business sector – but there is a recognition that there is still a way to go before the global economy can be said to have made a full recovery,” said Raef Lawson, Ph.D., CMA, CPA, IMA Vice President of Research and Policy. “Amidst improving confidence it is encouraging to see that businesses are investing in people – the key element to any future success.”

Lawson added: “However, the optimism is tempered by continuing uncertainty. Geopolitical instability in Ukraine and Russia and conflict in areas of the Middle East continue to cast long shadows over the global economy.”

Click here to view the full report

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