Business confidence falls
UK business confidence has fallen to its lowest level in at least two years, new figures reveal.
The UK Business Confidence Monitor (BCM), compiled by the Institute of Chartered Accountants in England & Wales (ICAEW), recorded a negative score of -6.8 for the final quarter of 2005 – its lowest level since it was started two years ago.
This was down from just -0.7 during the previous three months, suggesting that the slowdown in consumer spending is having a major negative impact on the outlook of UK businesses.
Business leaders surveyed also cited rising energy costs and climbing inflation as contributory factors to the sharp drop in confidence and called for a cutback in public spending growth to allow the economy to pick up.
ICAEW chief executive Eric Anstee said: “Growth is predicted to be lower than forecast by the chancellor, and while the economy is not in freefall, indications are that it is weakening at a faster rate.
“With the consumer slowdown feeding into other parts of the economy, and with inflation currently above target, it is time to look seriously at how the chancellor intends to plug the gap in the UK’s finances.”
Mr Anstee warned that, as the economy slows, consumer borrowing falls, and oil and cost prices increase, UK businesses will not be in a position to cope with any further tax increases.
He therefore called on the government to “curtail the growth in public spending as a viable way of balancing the books”.
The business services sector issued a particularly gloomy forecast, with confidence falling for a fifth consecutive quarter, from +9.4 in the third quarter of 2005 to just +1.0 this quarter.
With the Bank of England widely expected to keep interest rates on hold today, Mr Anstee warned that confidence was likely to fall further unless there was a sharp upturn in consumer spending over Christmas.
