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Survey shows business confidence still falling

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14th Nov 2005
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The latest ICAEW/Orange UK Business Confidence Monitor shows that confidence in the economy has fallen for the fifth consecutive quarter, to its lowest level since the Monitor began two years ago.

The quarterly survey recorded a negative score of -6.8 (down from -0.7 in the previous quarter) among finance professionals across the UK economy. The results suggest that the consumer-driven UK slowdown is starting to impact the wider economy, says the Institute of Chartered Accountants of England & Wales (ICAEW), and confidence is being dampened by rising energy costs and creeping inflation, as well as sluggish consumer spending.

"The extent of the increase in inflation, which is currently exceeding the Bank of England's target, has lowered expectations of an interest rate cut in the run up to Christmas, thus dampening business confidence," says the institute.

The survey also indicates that the rate of growth for 2005 as a whole will be 1.6%, compared to the chancellor's Budget prediction of 3-3.5%.

Echoing recent statements from the CBI, Big 4 accounting firms and employers' associations, the ICAEW is urging the government to cut public spending, rather than raise business taxes as a way of plugging the finance gap.

ICAEW chief executive Eric Anstee said: "It is clear that in a time of slowdown and rising oil and input prices, business cannot take any further tax increases. Neither is there the stomach for further borrowing. The ICAEW is therefore calling on the Government to curtail the growth in public spending as a viable way of balancing the books. We are asking for more financial efficiencies as a way of achieving this, and not by depriving the public services of essential funding."

The full report can be downloaded from the ICAEW website.

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