Businesses cheerful but without real reason, says survey
THE mood of businesses in the region may have turned a corner in recent weeks, but that’s more down to sentiment that the worst is over than hard evidence, a new survey suggests.
Levels of confidence among the region’s senior executives about their business’ prospects are the highest since spring 2008, despite an increase in the number of those facing financial difficulty, according to KPMG’s National Business Confidence Survey.
The proportion of senior executives who think their business prospects are good has almost doubled to 42%, from 22% in the first quarter of 2009. And only one in four executives currently believe their own prospects are poor, down from 37% in the spring.
The improved sentiment could be down to the fact that 55% of executives now believe the economy is at the bottom of the cycle. And three times as many expect the recession to last less than a year – 49% compared to 14% in the first quarter.
But the rise in confidence cannot be down to an improvement in the conditions businesses are facing – one in three admit to experiencing financial difficulties and the number facing higher financing costs has increased by 10% on the last quarter to 51%.
Jonathan Hurst, senior partner for KPMG in Manchester, said: “It’s quite peculiar that in tandem with a worsening in the financial problems businesses are grappling with, their confidence levels have risen. It perhaps demonstrates that even as their agendas are being hit by new challenges, they are taking heart from the relative stability in the economy over the last few months – a period without any dramatic and negative announcements.”
He added: “While it’s encouraging that there has been an increase in confidence, this is only an improvement compared to the spring which revealed the lowest levels of optimism since our survey began in 2004.”
