Business Confidence Up But Will UK Avoid Triple Dip Recession?

Business confidence is up...The latest ICAEW/Grant Thornton UK Business Confidence Monitor (BCM) is released, pointing to an atmosphere of increasing business confidence.

The Business Confidence Monitor, released quarterly, indicates that confidence is at it highets level since the second quarter of 2011 and that there will be growth in the current quarter.

The BCM Confidence Index stood at +4.2 in Q4 of 2012 and so far, in Q1 of 2013, that figure stands at +12.8

However, there are still a number of concerns amongst decision makers at small businesses across the country.

One of the gretaest worries amongst SMEs is that they still eem to be cautious and reluctant to invest. A low levle of capital investment and low salary growth are indicative of this caution.

Management Skills Are an Issue

Secondly, there’s a concern that there are not enough skilled managers and that this could be a problem when the recovery starts, leaving some SMEs behind becuase they do not have the right skills.

1 in 10 businesses say that finding employees with management skills is harder than it was a year ago.

There is however, generally good news in the labour market, with private sector firms saying they expect to see an increase in hiring over the next 12 months.

The last year has seen staff numbers up by 1% and within the next 12 months the headcount is expected to gorw by 1.5%

Confidence and Improvement

Overall, businesses reported an increas in turnover over the last 12 months of +3.3% with an anticipated growth of 4.6% in the next year.

Profits also increased with a growth rate of 2.5% and an expectation to be 3.9% this year.

The positives were in place across all regions of the UK with the brightest outlook in the South East of England and Wales.

The upward trend was mirrored in all sectors of the economy too with the IT & Telecommunications and Construction sectors looking the strongest.

Michael Izza, The Chief Executive of the ICAEW, said:

“There was a risk that, combined with the traditional January blues, the bad weather and some high profile retail collapses, talk of a triple dip recession could become self-fulfilling. These results show that we are set to avoid a third period of technical recession, but no one should be complacent. There is only one way out of our economic malaise, and that’s to increase our economic output. Such a task isn’t going to be easy, or indeed quick.”

Scott Barnes, Grant Thornton’s UK CEO, added:

“Export growth rose slightly this quarter as the global economy picked up. This could be a sign that the export-led recovery we need may be beginning. This is coupled with an improvement in both profit and turnover growth, which companies expect to increase in the year ahead. Despite a rise in confidence though, companies’ modest plans for capital investment are a worry as this is crucial to a strong and sustained recovery.”

To see the full report go to icaew.com/bcm

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