Confidence up but doubt lingers over economy

Confidence levels among senior executives about their business’ prospects are the highest since spring 2008, despite an increase in the number facing financial difficulty, according to KPMG’s latest National Business Confidence Survey.

The proportion of senior executives questioned for KPMG by Opinion Leader Research who think their business prospects are good has almost doubled to 42% from 22% in the first quarter.

And only one in four executives currently believe their own prospects are poor, down from 37% in the spring, with one third ‘indifferent’.

But business executives are far gloomier about the wider economy. Just over half (54%) consider the UK economic outlook to be bad, while less than one in ten (9%) are bullish about economic prospects. While negative, these findings are a significant improvement on the spring when 81 percent said the economic outlook was bad and a miniscule 3% felt there was cause for optimism.

Improved sentiment overall may be linked to the fact that a slim majority (55%) of executives now believe the economy is at the bottom of the cycle. It is then no surprise that three times as many expect the recession to last less than a year - 49% compared to 14% in the first quarter.

Malcolm Edge, head of markets for KPMG in the UK, said: “While it’s encouraging that there has been an increase in confidence, this is only an improvement compared to the spring which revealed the lowest levels of optimism since our survey began in 2004.”