Businesses are optimistic but output declines

Nia Williams

July 26, 2010

The confidence of UK businesses continued to improve during Q2 of this year, despite the fact that business turnover has declined since the first quarter of 2010, according to the latest Business Factors Index from Bibby Financial Services.

In March 2010, the Index, which tracks the quarterly performance of business turnover across the UK, reached the highest level for two years at 108.1 points. However, overall performance levels during Q2 means that the Index dropped by 12.4 points to reach 95.7 in June. It appears that the productivity peak in March has helped to maintain the optimism and confidence among the business community.

Edward Rimmer, UK chief executive at Bibby Financial Services commented: “It is disappointing to see that the economic momentum which we saw peak in March of this year, has not been maintained.

“However, the Index suggests that this has done little to curb optimism among UK business owners and managers.

“It is imperative that firms do not become complacent and that they acknowledge that the UK economy, as the Index demonstrates, is susceptible to fluctuations with more challenges expected in the coming months.

“While the announcement during the emergency Budget of the increase in small business rate relief and the introduction of a National Insurance ‘holiday’ for small businesses outside of London and the South East may be welcome news to some UK firms, other actions such as public sector expenditure cuts will hit businesses hard.

“As a result, many have already been forced to take stock and improve the efficiency of their business, through increasing credit control, reducing debtor days and streamlining business processes.

“This is no bad thing for firms, but they may have to return to recessionary business thinking in order to move forward again.”

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