Confidence among UK businesses has slumped even further in the face of continued economic uncertainty, according to Lloyds TSB.
The latest barometer of business confidence from the bank shows that optimism among UK firms is close to an al-time low. In response to the survey, 20% of firms are optimistic about prospects for the economy, while 53% are pessimistic.
In light of these concerns about economic prospects over the coming 12 months, the survey shows that many companies are expecting weaker levels of business activity – just 24% expect an increase.
Across the sectors, distribution firms report the weakest confidence levels, in terms of their own business activity. Just 12% said they expect an increase. Meanwhile, the service sector seems to be faring slightly better with 32% expecting an upturn in their fortunes.
Trevor Williams, chief economist at Lloyds TSB Corporate Markets, said that the combination of worsening economic conditions and tighter credit “means that firms are very likely to trim investment spending even further than they already have”.
“And it’s unlikely we’ll see a quick turnaround in this trend any time soon , given the worries businesses have about a potential recession,” he continued.
However, there is hope of a period of “respite” said Williams. “The recent fall in oil prices and declining input costs in other areas, do give reason for hope that pressure on operating margins may soon start to ease.”
© Crimson Business Ltd. 2008