Business confidence has fallen for another quarter as companies become more cautious about their prospects in the year ahead, according to a survey by a leading accountancy body.
Fewer businesses are as confident about their prospects as they were last quarter. The banking and construction sectors are considerably more pessimistic with investment falling and concerns about skills shortages, but the Institute of Chartered Accountants in England and Wales (ICAEW) said most executives were still upbeat about the prospects for the wider British economy. IT and communication businesses remain particularly upbeat.
Michael Izza, chief executive of the institute, said: “Although not as confident, businesses remain optimistic about the UK’s economic outlook. Whilst confidence has fallen back, perhaps not surprising in a general election year, it remains high and above pre-recession levels.
“Much of this optimism is being driven by the growth in domestic demand. Consumers are reacting to the unusual period of low interest rates, inflation, oil and commodity prices by spending. Wages are now outstripping inflation and employees are feeling empowered to seek new pastures in order to maximise their earnings. This leads to headaches for business leaders as to the best way to reward and retain their staff.”
The institute runs the survey with the accountancy firm Grant Thornton. “The decent UK business growth that has been achieved over the last couple of years has put the UK in one of the strongest positions among global economies as we entered the year. Yet, in the context of a highly unpredictable election, coupled with uncertainties across the eurozone and the UK’s relationship with the EU, some jitters are inevitable,” said Scott Barnes, chief executive of Grant Thornton.
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