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Business confidence drops after two year high

1 min read

04 August 2014

The latest findings from the ICAEW Business Confidence Monitor (BCM) found confidence in future prospects has fallen despite a two year consecutive rise.

The BCM Index fell 5 points, from 37.3 to 32.3, suggesting companies are approaching the future with a little less optimism.

Stephen Ibbotson, director of business at ICAEW, notes the potential reason for the drop: “Businesses are becoming more realistic about the future. The imbalances in our economic recovery continue to persist – our exports remain weak, and investment isn’t maintaining momentum.”

He continues: “We look to the Bank of England and the government to work harder to ensure that the recovery is placed on a broader footing before we see this still relatively high optimism erode away.”

Economic growth is expected to be 0.9 per cent for Q3 2014, however this is expected to slow further for Q4. Business investment is also expected to slow, and has not this far continued apace with economic recovery. Bank interest rates are expected to rise early next year.

Some good news, however: employment prospects are expected to increased over the next financial year by 2.5 per cent; as well as small increases in salary. 

Future employment, however, is expected to exacerbate skills shortages, such as those in the construction, utilities and IT sectors.

Scott Barnes, CEO of Grant Thornton UK LLP comments: “As the labour market continues to improve, and staff turnover increases, it is important that we ensure that those entering the workforce are adequately equipped with the skills needed to take the economy forward.”

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