Despite ongoing confidence in the economic outlook, the index value was marginally down for the first quarter of 2015, dropping to 104.4 from 106.8 in Q4 of 2014. This indicated a further drop from a high of 108.7 at the beginning of 2014.
The survey measures entrepreneurial confidence in the economy, and questions business owners about their borrowing habits as well as growth plans. Guy Rigby, head of entrepreneurial services at accountancy and investment management group Smith & Williamson, suggested that these latest results signal “uncertainty in future stability in the light of a range of political and economic factors”. Rigby said that these included: “Euro depreciation, the threat of “Grexit”, oil price volatility, geopolitical implications and the continuing unrest in Ukraine and the Middle East.”
Responses to the study suggested that home-grown uncertainty around the approaching general election was also a determining factor. Rigby added that there were concerns about the impact on the economic recovery and the “longer term prospects for business”.
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Addressing questions ahead of May’s general election, Smith & Williamson asked respondents whether they thought businesses’ long-term interests would be better served by eliminating the deficit through spending cuts, or increasing public sector borrowing. Some 65 per cent said that focusing on eliminating the deficit would be a better route, in line with current policy. The results though, also suggested confidence in the economic outlook, with 71 per cent saying they expected the economy to improve over the next 12 months.
The latest index also indicated that business owners were aware of the need to increase flexible working opportunities – 78 per cent thought that it was essential in the “war for talent”. This follows research by the Centre of Economics and Business Research and software company Citrix back in December, which suggested that flexible working could boost the economy by £90bn.
Jacqueline de Rojas of Citrix said a “mentality shift” was needed, and that “it is time to move on” from judging workers on how long they spend at their desks to evaluating them on the work they actually deliver.”
Another area of concern for those surveyed was cyber security, with nearly three quarters (74 per cent) agreeing that businesses need additional investment in cyber security. Rigby added: “This topic will feature prominently on future boardroom agendas. Business thrives on confidence and is threatened by global uncertainties. It seems that the volume has been turned up and the sheer number of these challenges is currently our biggest threat.”
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