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July 12, 2011

Business confidence up as economic outlook wanes

UK business executives are less confident about economic growth but more optimistic about the survival of their business, according to the Q2 Chartered Institute of Management Accountants (CIMA) Business and Economic Outlook Survey.

CIMA’s UK economic prospects index fell 12 points below the level recorded in the first quarter of the year. This has largely been attributed to additional bank holidays in April with stronger growth forecast for the coming months. 

Concerns about the future are being fuelled by a decrease in customer demand, which was cited by 60 percent of respondents as the major business challenge.

In addition, 67 percent of respondents are worried about the effects of government spending cuts, which was the greatest factor curbing optimism about the economy.

Just over a quarter of respondents expect government spending cuts to have a direct impact in the reduction of full time equivalents in 2011.

Business confidence on the rise

While CIMA members are uncertain about the economy, there is growing confidence in the future survival of their businesses. The number of respondents that are ‘extremely confident’ about the survival of their business has doubled in the past quarter and the primary reasons for this include the recovery of the banking system and improved employment prospects.

Six out of ten respondents were aware that their company has a sustainability strategy in place, 13% were unaware and 27% said that their company had no such strategy. 

Just over half (51%) of respondents said that the organisation they worked for had the necessary skills within their company to become a low carbon and resource efficient organisation.

The survey was conducted among 1,094 CIMA members, including the views of 159 members at director and board level, who completed an online survey between 15 and 30 June 2011.


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