Business sector hits a peak for optimism and short term confidence

Short term confidence is at a relative high in the business sector. The Centre for Economic and Business Research conducted the survey on behalf of BDO and confirmed that optimism has reached a 12 month peak, but the downside is that that long term prospects have dimmed as the crisis in the Eurozone continues to dampen expectations.

With the volatility in Europe, it was little surprise there was uncertainty in confidence levels here. BDO spokesperson Partner Peter Hemington says that the rising value of the pound meant lower earnings from exports as demand reduced with the higher prices. The weakening of the Euro and the continuing recession meant that overseas buyers were reducing their imports.

BDO uses an output index which is built using data from nearly 11,000 firms. Any reading above 95 implies confidence is high with sustained growth. The index was measured at 96.7, up from 95.8 in April.

The Optimism Index, which measures longer term confidence fell again for the third month in a row; May’s figure of 95.5 was down from a high of 98 three months ago.

The figures indicate short term growth later this year which may reduce shortly after.

Mr. Hemington stressed that businesses are definitely concerned with the continuing economic issues throughout Europe and are being conservative in their business planning. This attitude undermines an already brittle recovery which may lead to a further downturn in the economy.

Although a downsizing of Government spending was a necessity, Mr. Hemington pointed out that some vital investments in infrastructure were being delayed when borrowing rates were at their lowest for some time, representing a missed opportunity.