Business confidence 'hits new low', says survey

car plant in Sunderland The zigzagging economy is putting businesses off investment, BDO warns

Confidence among UK businesses hit its lowest level in at least 21 years last month, a survey suggests.

Accountancy firm BDO, which published the survey, said it suggests the economy will struggle to grow in the first quarter of this year.

That is despite signs of improvement in the labour market, it said, with firms intending to hire more staff.

The survey gauges optimism in business performance and the economy over the next six months.

BDO's Optimism Index fell to 88.9 in January, well below the score of 95 needed to indicate growth.

That is the lowest level recorded since the survey was launched in 1992.

Peter Hemington, a partner at BDO, said the findings suggested businesses were becoming used to the lack of sustained growth in the UK economy.

'Zigzagging growth'

"It seems the damaging effects on businesses of five years' zigzagging economic growth has left them wary of making concrete plans for expansion and resigned to the 'new normal' of economic stagnation," he said.

"To end this cycle, it is imperative that the government implements plans to expedite growth."

Continuing weak economic growth has raised concerns of a triple-dip recession early this year, extending a recessionary period that began in 2008.

The continued pessimism came in spite of apparent improvements in the labour market.

BDO's Employment index rose in January, indicating an improvement in the hiring intentions of businesses over the next six months.

Optimism within the manufacturing sector also improved.

Aerospace company BAE Systems, the UK's largest manufacturing employer, has announced plans to recruit nearly 400 new apprentices in 2013, the highest number it has recruited since 2008.


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  • rate this

    Comment number 231.

    problem is its reports like this and doom and gloom in the media in general that are making things worse! Last week there were several indicators from jobs data to house sales indicating the exact opposite too this. No wonder everyone is keeping hold of their cash and not spending, its because none of the so called experts can agree on anything and fall on the doom and gloom side given a choice!

  • rate this

    Comment number 213.

    Not surprised one little bit.

    I have been running our company for 8 years, great for the first 6, last year seen the first down turn, but the past 3 months has seen around a 20% drop in sales, the trend this year seems to be the same.

    The problem is people have less disposable income, it is not rocket science, take away peoples income and they have less to spend on non essential items.

  • rate this

    Comment number 47.

    You can't grow unless you are able to sell your products to those who can afford to buy them. Economies on the Continent, our biggest export market, are in decline. Under those conditions, even zero growth could be seen as a bonus, as we are just about keeping our heads above water while those around us are sinking.

  • rate this

    Comment number 46.

    After 5 years of recession and back-breaking effort, I have sold my business and am having a break from the work nightmare. Whatever you try and do, it's tough because of a lack of certainty and confidence. Customers delay and put off because they are unsure of the future. This creates a domino effect. I'll go back into the market when it starts to look brighter. That's a couple of years away.

  • rate this

    Comment number 45.

    The fundamental problem is the ignorance, indeed rejection, by UK government and business of how the financial world has changed since the crash. Both try to raise their funding through Jurassic traditional banking channels that no longer exist. It's time we caught up with the rest of the world by way of infrastructure and business funding before we become a backwater of the global economy.


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