Confidence is low, says poll

Tim Wallace
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EXPECTATIONS of economic growth are weakening, according to 200 fund managers surveyed by Capital Spreads, City A.M. can exclusively reveal.

Lloyds Bank Corporate Markets is reporting low business confidence in a separate study, also out today.

Fund managers are 18 per cent more pessimistic than they were in May, according to Capital Spreads. At the end of the Q2, 63 per cent expected the economy would improve over the next 12 months; that fell to 43 per cent by the end of August.

Similarly, in May 13 per cent expected the economy to weaken, compared with 31 per cent in August.

Lloyds’ barometer of business confidence found a slight improvement in September, but still anticipates “very sluggish growth” into 2012.

The survey peaked at a net balance of 36 per cent of businesses feeling increasingly positive about the economy in June. That plummeted to -3 per cent in August and rose again last month to seven per cent.

“Virtually every economic indicator for the last quarter has been a disappointment and, whilst we are probably not yet in a recession – and may never actually record a technical downturn – we are certainly nowhere near the kind of growth that would restore confidence,” said Simon Denham, chief executive of London Capital Group.

Despite high inflation in the UK and rising prices in the Eurozone, analysts believe low confidence will push the Bank of England (BoE), European Central Bank (ECB) and Federal Reserve towards more quantitative easing (QE).

“It is very possible that a flurry of weak data and surveys over the next few days could prompt the BoE into launching QE2 as soon as Thursday,” said IHS Global Insight’s Howard Archer.