Firms in the UK are becoming increasingly pessimistic about the outlook for the economy, Lloyds TSB’s Business Barometer has shown.
The survey showed the economic optimism among UK businesses fell 7% to its lowest level since the survey began in January 2002.
Just 14% of the firms said they were more optimistic about the economy, while 69% were more pessimistic than they were in September.
In light of these concerns about the economy, the survey revealed that firms continue to rein in their expectations for trading in the year ahead. While 31% of firms expected their business activity to increase over the next 12 months, 26% expected activity to decrease.
Trevor Williams, chief economist at Lloyds TSB corporate markets, said: “Rising unemployment and the high cost of borrowing means business confidence continues to break survey records, as firms take an increasingly bleak view of their prospects.”
Firms’ pessimism may well be warranted – the Confederation of British Industry (CBI) today warned that the UK’s recession will be tougher and longer than first thought.
In its revised economic outlook for 2009, the CBI predicted that the recession will run for most of 2009 and will see unemployment peak at 2.9m.
The business group said it has downgraded its expectations after confidence and business activity took a knock following financial turmoil in October.
John Cridland, CBI deputy director-general, said: “What is clear is that the short and shallow recession we had hoped for a matter of months ago is now likely to be deeper and longer lasting.
“An unwelcome consequence of the downturn will be a significant loss of jobs, many of them in sectors that have been relatively insulated until now.”
© Crimson Business Ltd. 2008
