British businesses cautious on economic recovery ; British businesses expect the economy to recover in the second half of the year although they are cautious of its strength, a survey by Lloyds TSB Commercial Business showed.
The survey’s overall business confidence, which tracks total sales, orders and profits expectations for the next six months, increased to 15 from 12, indicating a moderate, rather than strong, pace of economic recovery. Thus, it is still well below the year ago level of 21.
Of particular importance, more than half of the companies that took part in the survey cited weak UK demand as the biggest threat to their business, a much higher proportion than those that pointed to the costs and the availability of finance, and regulatory changes, which were cited by 23% and 19%, respectively.
In this same vein, the survey reported that, “the strength of international demand, however, belies a much more subdued outlook for companies more reliant on domestic spending.”
Furthermore, a majority of businesses also expect rising interest rates in the next six months. Higher costs related to increasing inflationary pressures will continue to erode margins, the report added.
Driving home the message of weak demand indications, the survey also reported how, “difficulties in the recruitment of skilled labour rose slightly, but remained below the historical average, indicating that growth in unit wage costs is likely to remain relatively muted.
Investment and employment trends remain subdued, highlighting companies’ uncertainty about domestic demand prospects, with exporters tending to be more positive about prospects for capital spending and staffing than companies reliant on domestic demand."
On the bright side, export sales have continued to perform strongly, with the expectations for the same, in the next six months, increasing for the fifth consecutive survey. A whopping 46% of companies expected exports to rise, while only 8% expected them to fall. (source http://www.sharecast.com/cgi-bin/sharecast/story.cgi?story_id=4386187 )
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