UK businesses less optimistic about economic prospects

Economic optimism among UK businesses has seen a significant fall in August, dropping to levels not seen since March 2009, reveal new figures.


Economic optimism among UK businesses has seen a significant fall in August, dropping to levels not seen since March 2009, reveal new figures.

Economic optimism among UK businesses has seen a significant fall in August, dropping to levels not seen since March 2009, reveal new figures.

Small and medium-sized enterprises’ (SMEs) optimism in the economy was down from a net balance of +4 per cent in July to -12 per cent in August, according to BDRC Continental’s Business Opinion Omnibus of 451 businesses.

The decline was prompted by fears that the UK could enter another recession amid the volatility in European markets and the downgrading of US credit ratings.

Businesses with less than ten employees saw a marked fall in overall optimism, with a net score of -16 per cent.

Companies with between 11 and 50 employees experienced the biggest change in August as optimism was down 21 points, but remained positive at +5 per cent.

Among SMEs with 50-250 staff, net optimism ratings were stable month-on-month at 0.

Shiona Davies, director of financial and business-to-business research at market research consultancy BDRC Continental, says, ‘This month’s Business Opinion Omnibus results have reflected the growing concern amongst SMEs and are a strong indication that businesses fear a double-dip recession.’

The results also show that businesses are losing confidence in their own trading prospects, declining for the third consecutive month from a net balance of +31 per cent in July to +21 per cent in August.

However, as Davies notes, SMEs remain ‘more confident about their own prospects than those of the economy generally’.

While trading prospects for the services industry are relatively high at +32 per cent, down 6 per cent on the previous month, retail and distribution is the least confident sector. In August, the sector had a net balance of +9 per cent, falling from +16 per cent in July.

Todd Cardy

Todd Cardy

Todd was Editor of GrowthBusiness.co.uk between 2010 and 2011 as well as being responsible for publishing our digital and printed magazines focusing on private equity and venture capital.

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