More than 50% of business leaders believe the UK has reached the bottom of the economic cycle, a survey has shown.
Research by business advisory firm KPMG found that 55% of business leaders are adamant that the recession has hit its lowest point, compared to 42% who believe the economy is still on a downward spiral.
The survey also found that confidence is climbing among UK business leaders. The number of business executives feeling optimistic about their prospects has almost doubled from 22% in the first quarter to 42%, marking the highest levels of hope since spring 2008.
However, Malcolm Edge, head of markets for KPMG in the UK, warned that the recession could be ‘L shaped’.
He said: “I think we are somewhere close to the bottom and that we may need to get used to this uncomfortable position. The jury is still out as to the likely shape of the recession and an L shaped one – with a long period of relative stability but nothing constituting a recovery – cannot be ruled out.”
Despite the increased optimism, businesses reported mounting pressures. One in three companies are now facing financial difficulties, while one in four said the relationship with their bank manager had worsened.
Respondents were also less optimistic about the state of the wider economy, with more than half describing the UK’s economic outlook as ‘bad’.
“The issues affecting the economy over the last year or so: weak demand, spare capacity, margin pressures and funding issues won’t magically disappear,” Edge added.
“Any companies that have not yet done so should undertake a robust review of their weak points – whether management, financial or operational. Taking firm action to minimise costs and improve efficiency is essential given the economy may be operating at a subdued level for some considerable time.”
© Crimson Business Ltd. 2009
