Business confidence at highest level in 3 years

CIMA has put out the following press release:

"The majority of businesses are feeling confident of their survival over the next 12 months but are less optimistic regarding the future of the UK economy, according to the latest CIMA (Chartered Institute of Management Accountants) Mid-Sized Business and Economic Outlook Survey released today.

The number of businesses who said they felt extremely confident of survival this year has more than doubled since March up from 34% to 69% - the highest level recorded since the survey began three years ago.  But they still remain cautious of the challenges ahead with over half saying falling customer demand is one of their main concerns, followed by the cost of materials and supplies (37%), political and economic instability (34%) and regulatory requirements (29%). 

The survey reveals mixed messages over the future of the economy with 42% of businesses saying they feel optimistic about the global economy compared to only a third sharing the same optimism for the UK economy overall.  Globally, the strength of emerging markets has been a significant factor along with over half naming a return to business confidence.

Government spending cuts continue to divide UK business opinion with 39% of respondents saying they were a reason for increased optimism but 67% said they were one of the primary reasons for not feeling optimistic about the economy.   Inflation ranked second (59%) followed by increasing oil prices (44%) and unemployment (31%) for why they felt negative about the future.

The division between those who are optimistic and those who are pessimistic about employment prospects in the economy is evident with 28% of respondents reporting a decrease in the number of full-time positions since the last quarter and 23% reporting an increase.  Adding to this, just over a quarter (26%) expects the government spending cuts to have a direct impact in the reduction of full-time staff in 2011.  This rises to 44% in the public sector and 43% amongst those working in health and education.  The industries least likely to experience a reduction in headcount as a direct result of government spending cuts are transport, distribution and storage (16%) and banking (18%) sectors.

There is positive news for school leavers with almost three in ten mid-sized businesses expecting to take advantage of the government’s £1.4bn funding initiative to train apprentices.  Mid-sized manufacturing and engineering businesses are the most likely to take advantage of the scheme with 44% saying they are likely to take on apprentices. 

Meanwhile, The Bribery Act, which makes it easier to prosecute companies who make corrupt payments abroad, came into force on 1st July 2011.  Offences can carry prison terms of up to 10 years and unlimited fines.  Despite this new piece of legislation only half of those surveyed said their companies were prepared for the Act.   

Andrew Harding, Managing Director, CIMA, said: “Business confidence appears to be growing although organisations remain cautious of how the UK economy itself will fare. The good news is that fears of a double-dip recession appear to be fading with the survey showing a sharp decline this quarter in the number of businesses expecting the UK to slip back into recession.”

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