Confidence is key says IoD

HALF of companies expect revenues to improve in 2012 despite the gloomy economic outlook, according to a new survey.

Just over a third judge the risk of a return to recession to be high or very high but more than 40% think any recession will be short and mild.

The Institute of Directors survey suggests 40% of companies expect profits will increase in 2012.

Graeme Leach, chief economist at the IoD, said: “The key group to watch is the ‘swing vote’, the one in two directors who think there is a moderate risk of a recession. Whether this group becomes more pessimistic or optimistic may well be the difference between recession and recovery in 2012.

“The resounding message from the survey is the critical role of confidence at this stage in the economic cycle.

“If the euro-crisis stabilises, confidence could return relatively quickly and companies could dust down business investment and recruitment plans put on hold last year. Alternatively, if the euro-crisis gets worse, confidence is highly unlikely to return this year.”

The survey suggests just over one quarter of companies expect business investment and employment to be higher in 2012.