Tag: Business Confidence

Business Confidence On The Rise

Analysis from several financial services firms of business confidence levels points towards an improving picture. Businesses are said to be more optimistic about future growth although they are still cautious about the year ahead.

The rise in confidence levels at the start of this year brings a halt to months of decline and has perhaps been buoyed by news of a strengthening pound and the prospect of Brexit not being as bad for the economy as everyone expected.

While businesses have plans to invest in the future, it is also true that bank lending to businesses fell by £1bn during the month of December 2017. Loans to businesses in the SMEs sector saw a significant drop too falling at their fastest for three years.

Alternative finance, meanwhile, has been the sector to benefit from the continuing sense of caution with businesses reluctant to take on new debts to fund any expansion plans they may have.

Asset finance takes away some of the risk involved in borrowing from banks and allows a business to use its assets to access funding.

Business that rely on importing and exporting into the EU will be watching closely to see what happens over the next 12 months and it is unlikely the mood of caution will be lifted during this period.

Business confidence at record high

A survey of UK business confidence by the accountancy industry body the ICAEW has recorded its highest reading yet – although a lack of export growth is giving cause for concern.

The construction sector is experiencing a strong recovery – although it has not yet returned to pre-crisis levels

The survey, which is produced with Grant Thornton, said confidence has increased for six quarters in a row.

The report is the latest to suggest the economic recovery is well established.

However, ICAEW also said there were concerns about the structure of the economy as export growth had failed.

Stumbling blocks

Their Business Confidence Monitor (BCM) said businesses reported the fastest investment growth since 2008, but growth in exports is expected to fall back.

Michael Izza, chief executive of ICAEW, said: “The export figures are disappointing and show that the government’s strategy is not working.

“We would like to see an increase in export guarantees to match the scale that German companies benefit from.”

As well as continued weak export growth, the BCM found other stumbling blocks for the economic recovery included skills shortages.

Its survey suggested the recent positive trend shown in the official employment numbers would continue, with respondents returning to job creation.

The brightest sectors were construction and banking, with confidence sharply higher among builders although output remains below its pre-crisis peak.

The latest reports from a string of housebuilders have shown buoyant sales – and profits – as government initiatives, such as Help to Buy, which is designed to help buyers of new properties, underpins demand.

Among bankers and those in the insurance industry confidence was at a record high, as they continue to recover from the aftermath of the financial crisis.

The survey found turnover and profit growth both picked up and business expect this to continue for the rest of this year.

[BBC News]