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Britain’s businesses outside the financial sector are not letting talk about a recession dampen their confidence, according to a survey of senior executives in the UK conducted by KPMG.
The findings show that despite ongoing volatility in the financial markets, other businesses are feeling quietly confident about their own prospects.
Scott Cormack, head of markets at KPMG in the UK, said: “This survey acts as a timely snapshot of what is keeping Britain’s chief executives awake at night. What is most interesting is that there appears to be a real dichotomy between the lack of confidence in the wider economy and that of the non-financial businesses themselves. These findings suggest that their fundamentals remain sound.”
Indeed, while the survey suggests that 88% of UK businesses believe we are in the throes of an economic slowdown, 60 per cent nevertheless say that prospects for their own company over the next 12 months are either good or very good. Similarly, 70% do not expect to make job cuts this year, but 82% expect other companies to do so.
Mr Cormack adds: “This begs the question as to why Britain’s businesses are more optimistic about their own fortunes than they are of the wider economy. Is it that they are being caught up in the hype surrounding the credit crunch and therefore feel compelled to say that we’re experiencing a downturn, when in actual fact, things are healthier than they seem? Or is it that Britain’s businesses are just a supremely confident and robust bunch who believe they can weather the storm?”
Looking more closely at the volatility in the capital markets, somewhat surprisingly, almost two thirds (63%) do not expect generally tighter borrowing conditions as a result of the credit crunch to adversely affect their own businesses – presumably because their own balance sheets are strong. There are also encouraging signs that businesses are becoming more positive about their prospects overseas, with more than three quarters (79%) believing that the UK is either ‘competitive’ or ‘extremely competitive’ in Europe, – a reflection, perhaps, of the recent weakness of the pound against the euro, which has helped UK exporters.
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