UK business positive about recovery, ACCA says
UK businesses are the most optimistic they have ever been about the recovery in the UK’s fortunes, but in the short term business confidence has taken a dip, partly because of the ‘budget effect’, according to research published by ACCA report Harris & Co accountants Northampton.
The UK trend is mirrored in the global data with the headline GECS Confidence and Recovery indices both rising in early 2014, bringing business confidence just short of positive territory for the first time in five years.
The Q1 Global Economic Conditions Survey (GECS) carried out jointly by ACCA and the Institute of Management Accountants (IMA) shows a record 70% of accountants polled are now optimistic about the state of the recovery, up marginally from 69% in Q4 2013. In comparison just 26% remain pessimistic, down from 30% in the previous quarter.
Respondents to the survey reported a growing number of business opportunities, with access to growth capital having improved and price levels and exchange rates stabilising further. Meanwhile, opportunities for inorganic growth appeared to reach a plateau, focusing more business’ efforts on capital spending and expanding their headcount.
However, despite strong signs of progress, 22% of UK respondents reported a loss of confidence, and there was a fall in the numbers who reported confidence gains, down from 43% in Q4 2014 to 40% currently. ACCA says this can be partly explained by a ‘budget effect’ which has focussed attention on government’s tax and spending decisions and put some business investment on hold, and the institute expects to see improvements in confidence over the next quarter.
Emmanouil Schizas, senior economic analyst at ACCA, said: ‘For the first time since the GECS began, UK respondents were, on balance, approving of their government’s response to economic conditions, even though they now believed fiscal retrenchment was bound to last a little longer than previously expected.
‘Finance professionals’ change of heart is almost certainly related to the improving state of the economy, but our findings show respondents also conceded that government support for investment had increased in early 2014.’