Last week it was reported from many sources that the German economy was in trouble, to the point of possibly relapsing into a recession – even as Spain, Ireland and Greece saw economic rejuvenation.
The IBR report, however, finds that the shrinking growth of economies like Germany and France resulted in a confidence drop across the EU of 35 per cent to five per cent in the period of three months; a drop of 30 points. In France, the drop was 28 points.
Scott Barnes, CEO of Grant Thornton UK LLP, said: “As one of the linchpins of the eurozone economy, the drop in business confidence in Germany is clearly a concern across the trading bloc particularly when it’s coupled with shrinking order books and a weak outlook on jobs in the country.
In Greece and Ireland, optimism has increased, with businesses in both countries expecting higher profits, and expecting to employ more.
Despite decline in other major EU economies, UK confidence actually rose. Up to 82 per cent; almost an all-time high for the country. This places the UK in second place in worldwide rankings for business optimism, behind India (95 per cent).
But export expectations were done – despite recent export initiatives. This suggests demand is largely domestic and uncertainty about foreign markets continues.
14 per cent of UK businesses cited access to finance as a concern.
Barnes said: The UK’s economy is still heavily dependent on trade with eurozone countries, so despite a stronger domestic outlook, contraction across the trading block could adversely impact the UK’s prospects.
Avoiding this dependence on the eurozone requires more support, such as building on the efforts of UKTI to help our mid-sized business community open new trade opportunities further afield, particularly in faster growing developing economies where ‘brand Britain’ carries a premium.
“Moreover, for the UK to really capitalise on current momentum and cultivate a business environment that’s fit for the long-term, a lot more work will need to be done particularly by the Government.