Businesses see only woe over coming months

Ben Southwood
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BUSINESSES harbour anxiety about coming months, based on worries about a shrinking UK economy and worldwide economic distress, according to surveys out today.

Corporate business sentiment on the economy was roundly negative in July, at minus eight per cent, though four points higher than June’s minus twelve reading, according to the Lloyds Bank business barometer. A result of zero denotes an equal number of positive and negative responses.

Companies gave increasingly gloomy assessments of their own prospects over the coming year, with a net balance of minus 30 per cent in July, compared to 36 per cent in June.

In another survey, from ICAEW and Grant Thornton, business confidence collapsed to 1.1 for the third quarter, compared to the 12 recorded for the second quarter. This is still a positive number, but the drastic fall reflects firms’ anxiety about the near future.

Despite many companies holding vast cash piles, firms appear unwilling to splash out, with capital investment set to increase just one per cent over the next year, the survey says.

But the one bright spot is exports, which firms expect to grow 3.7 per cent over the year, raising hopes of a meaningful recovery based on international sales.

“The findings for this quarter are not a surprise,” said Scott Barnes, chief executive of Grant Thornton. “Global growth has slowed, markets have responded downwards and the Eurozone crisis will not go away.

“The one positive note is the encouraging levels of exports. Inward investment and overseas expansion will be core to improving the UK economy.”