| CATEGORY: NEWS AND ANNOUNCEMENTS |
Business confidence highest in 6 years |
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Mon 23 Nov 2009
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LONDON (SHARECAST) - Business confidence has risen to its highest in six years, according to a new survey, reinforcing the view that Britain is finally emerging from recession.
The Institute of Chartered Accountants in England and Wales (ICAEW) said sentiment improved to 24.6 in the latest three-month period, up 4.8 from the previous quarter and the strongest read since the index began in 2003.
Britain’s economy shrank by 0.4% in the third quarter, confounding analysts’ expectations of a return to growth and suggesting that further stimulus measures may be on the cards.
It was the sixth consecutive quarter of contraction, the longest peacetime recession in the UK since the 1930s and stumped analysts who’d expected a rise of 0.2%.
Today’s survey found that more almost 60% of companies more confident about prospects for the economy in the fourth quarter despite still having trouble getting access to finance.
Profits are also likely to be better than feared, with the average business predicting a 2% drop in the year to the fourth quarter versus a 3.2% fall expected in the 12 month to the third quarter.
But although the report has been welcomed, the ICAEW did warn that the recovery was “very fragile” and would probably be a slow process.
"The UK economy is undoubtedly in better shape than this time last year and the improvement in confidence shows the relief businesses feel to have kept their heads above water,” said Michael Izza, chief executive of the ICAEW.
"Although we are still on track for a return to economic growth, the recovery is very fragile and will take time."
Last month, the British Chambers of Commerce said business confidence had improved slightly but was still "frail".
Its survey of 5,500 companies found that confidence had strengthened especially among manufacturers, but domestic orders and sales were still down on the previous quarter.
"The Q3 results support our assessment that the UK economy is on the brink of leaving recession," David Kern, chief economist at the BCC said at the time.
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