UK confidence devastated by Eurozone crisis

THE EUROZONE crisis has battered British business confidence again, influential surveys from both Deloitte and BDO show today, leaving firms unwilling to borrow and invest, and too uncertain to boost hiring.

Deloitte’s survey of chief finance officers (CFOs) shows its third major dip in confidence in the last five years, and its sharpest decline since 2007.

Ninety-five per cent of CFOs rated current financial and economic uncertainties as “above normal” in the second quarter, with a major negative impact on spending plans.

A net balance of 32 per cent expect hiring spending to fall, 34 per cent see capital expenditure falling, and a balance of 67 per cent predict a fall in discretionary spending.

After a rally in the first quarter, CFOs now see an almost 50 per cent chance of the recession continuing until the end of the year, or for the economy to hit a “triple dip” recession in the next two years.

“Economic uncertainty remains the big constraint on corporate expansion,” said Deloitte chief economist Ian Stewart.

“Uncertainty has had a corrosive effect on risk appetite and 80 per cent of CFOs say this is not a good time to take risk onto their balance sheets.”

Meanwhile BDO’s business trends report reveals confidence fell to its lowest point of the year so far in June, with the manufacturing sector taking a particularly hard knock.

The optimism index, which predicts business performance two quarters ahead, fell for the fourth consecutive month to 93.5 in June, from 95.5 in May – below the key 95 level that indicates growth.

The manufacturing sector led the fall with a drop from 96.5 in May to 83.8 in June – the lowest reading since March 2009.

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April 22, 2014, 2:25pm