Economic Growth and Business Confidence Slips – But Double-Dip “unlikely”
Lloyds TSB Corporate Markets finds a drop in business confidence
The latest instalment of their monthly Business Barometer shows that confidence levels in September slipped to their lowest since March 2009 amid fears of declining growth.
The survey found a rise in the number of businesses who said they were more downbeat about the economic outlook (32%), and an overall drop in the number of firms saying they were optimistic (41%).
Larger businesses reported having reduced confidence – likely due to the upcoming public sector cutbacks – but small businesses have proved to be more resilient.
In other reports, many small business employees have readily accepted pay cuts, a drop in hours, and even unpaid overtime in an effort to see their employer through the worst.
According to TheBusinessDesk, Trevor Williams, chief economist at Lloyds TSB Corporate Markets, said:
“The debate over the likelihood of a double dip recession in the UK is intensifying. The barometer has proved to be a reliable guide to future economic growth and with confidence slipping as it has done, we can expect GDP to slow quite markedly before the year is out.
“Despite the overall decline in optimism, there is still hope for companies across regions and sectors that are benefiting from growing exports and a weaker pound.”
However, a recent report from the British Chambers of Commerce (BCC) is likely to further damage confidence levels, as the research shows that growth in the UK economy is slowing, with the service sector particularly affected.
The report claims that economic growth in the third quarter was “considerably” slower than in Q2, and warned that businesses could face serious challenges in the coming months.
According to the BBC, Stephen Robertson, director general of the British Retail Consortium (BRC), said that consumer confidence was “fragile” ahead of the government’s spending review and “sales growth continues to be poor.”
He added: “We’ve now had six straight months of low growth thanks to persistently weak consumer confidence and worries about the future. It’s clear people are cautious and major spending is largely on hold.”