The quarterly International Business Report (IBR) reveals that in the face of declining economic prospects all across the Eurozone and the associated Continental loss of confidence, the confidence of UK businesses is weathering the storm.
This all comes following reports last week that the German economy was facing hardships, as well as the possibility of the recurrence of recession (despite the economic rejuvention of Greece, Ireland and Spain).
The IBR report has found that the decreasing levels of growth seen in the larger European economies like Germany and France has resulted in a fall in confidence from 35% to 5% across the EU. In France alone, confidence dropped 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.”
However, optimism in Greece and Ireland has increased and businesses in both countries are anticipating higher profits and greater rates of employment.
In the face of these mixed signals from Europe, the confidence in UK business actually rose to 82%, nearing its highest ever levels. In global terms, the UK ranks near the top of business optimism, second only to India at 95%.
This confidence did not extend to export expectations, though, despite recent export initiatives, indicating that demand is mostly domestic and that uncertainty about markets abroad is still high.
Of their primary concerns, 14% of UK businesses claimed to be worried about access to finances.
Barnes continued:
“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.”
Words: Peter Cribley