Businesses more hopeful over their prospects

Nia Williams

April 13, 2010

This is according to the latest Lloyds TSB Corporate Markets Business Barometer.

The survey – a monthly snapshot of company views on the outlook for the economy – shows that more than half of UK businesses (54%) expect their business activity to increase over the coming year, while only one in twenty (5%) believe trading will slow. The resulting balance of +49 is 3% higher than February’s balance of +46%.

Firms are still cautious about the economy as a whole, with the balance of firms saying they are more optimistic about the economic outlook than they were three months ago falling back 12% to 43%. However, these figures are still in line with the recent monthly average of the survey, indicating that sustained economic recovery is likely to continue during the first half of the year.

Across the sectors, optimism amongst distribution firms hit a two and a half year high, fuelled by renewed confidence amongst transport and communications firms, with the balance expecting better business prospects rising 16% to 50%. Amongst services firms there was also a rise of 5%, to a balance of 51%, reflecting improved sentiment in business services.

Looking at businesses based on their size, it is the largest firms – those with a turnover of more than £25 million – that are the least optimistic about their own prospects and the general economic outlook. A balance of 14% of these businesses are expecting business activity to increase over the coming 12 months and a balance of 12% say they are more optimistic about the economy than three months ago.

By way of contrast, a balance of 50% of small firms (with a turnover of up to £15 million) are anticipating an upturn in business this year, and a balance 43% say they are now more hopeful about the economy in general than they were three months ago.

Trevor Williams, chief economist, Lloyds TSB Corporate Markets, said: “It’s clear now that businesses really are becoming more optimistic about their prospects for the year ahead. Although many firms are still cautious about the broader outlook for the economy, confidence levels are still above average.

“Businesses confidence is a good barometer of what lies in store for the economy. Given that optimism does seem to be returning, we can expect the recovery to continue throughout the first half of the year at least.”

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