Firms' confidence about their future
performance dropped sharply in March, as pessimism about
prospects for the UK economy hit a six-year low, according
to the latest Lloyds TSB Corporate Markets Business Barometer.
The
survey of UK businesses with a turnover of £1 million
plus, found that optimism about the UK economy fell for the
seventh consecutive month. The balance of firms reporting
that they were more, rather than less, optimistic compared
to three months ago dropped to -29% in March. This figure
has fallen rapidly since August, when the balance was +32%.
In
light of falling economic optimism, firms reassessed their
expectations of future business activity. In March, the balance
of firms expecting business activity to increase over the
next twelve months dropped to 40%, from 48% in February -
the largest single fall in four months.
But performance expectations
varied between sectors. Although distribution and industrial
sectors were negative about their
outlook, confidence in the service sector improved with 66%
of services firms predicting that output will increase over
the next 12 months.
Trevor Williams, chief economist, Lloyds
TSB Corporate Markets, said: "As firms become more
concerned about the future of the UK economy, it is no surprise
that they are starting
to revise their expectations for future performance. The
double whammy of a potential slowdown and the cost of raw
materials getting ever higher, means firms are increasingly
expecting activity to fall.
"But this pessimism is yet to touch
all business sectors. The services sector remains positive
so far, perhaps surprisingly
given the current financial market dislocation"
23 April 2008.
