FDs losing confidence in the economy
Confidence in the economy has fallen by 11% over the last quarter, according to a survey of UK finance directors and controllers.
The survey – conducted by The Chartered Institute of Management Accountants – showed only 61% of respondents were optimistic about the economic outlook compared with 72% in March.
At the same time the proportion of pessimists rose from 11% to 15% over the same period.
The survey findings prompted CIMA director of financial services Tony Dart to criticise the government ‘for failing to act decisively to address the problems faced by industry’.
He added: ‘The survey results speak for themselves. Confidence in the economy is at its lowest point so far this year.
‘Manufacturing has been hit particularly hard by the weak euro, and continuing high interest rates coupled with the uncertainty over the possibility of entry into the EMU has unsettled industry as a whole.’
FDs were also less positive about the outlook for their own businesses over the next twelve months – with only 67% saying they were optimistic, compared to 75% in March.
The strong pound and high interest rates were the most frequently cited causes for concern, while more than three-quarters (76%) of the sample felt that a reduction in interest rates would be beneficial to the economy and 46% believed that the strength of the pound continued to damage their businesses.
CIMA’s results followed the Bank of England’s decision to maintain interest rates at 6%.
The figures also indicate that uncertainty over entry into the euro has affected business confidence. While 56% are in favour of adoption of the single currency, 59% reported that the weakness of the euro makes them wary of this.
