Business confidence on the rise as UK firms chalk up growth and project increased spend – but UK lags major world economies, shows Business Confidence Index report.
Regus, the global workplace provider, today presents its latest Business Tracker report including an updated Business Confidence Index (BCI), based on the opinion of over 4000 businesses in the UK. The report reveals that business optimism stands at its highest point since October 2009 – 108 points – and that rising confidence is being matched by real results: a net 38 percent of UK companies’ revenues have risen in the last year, and 31 percent saw their profits rise. However, the UK lags the US and all other major world economies according to each of the Business Tracker’s indicators. The BCI is up 8 points since October 2010, up 31 points since its lowest trough in April 2010 and up 25 points since the Index began in October 2009. Although UK confidence is gradually returning, the UK’s standing remains the second lowest in the global Index.
A net 38 percent of UK firms reported revenue rises in 2011 but this is a significantly lower proportion than in other major economies, such as the US (44 percent), Germany (64 percent) and France (49 percent). Similarly, the proportion of UK firms reporting profit rises falls behind all other economies apart from Spain and Mexico. On a positive note, UK companies’ revenue and profit rises reported in the Business Confidence Index are in line with expectations expressed in last year’s edition; this is the first time that predictions of revenue growth have been in alignment with outcome. UK companies remain cautious in their forward projections: over a quarter (27 percent) expect the economy to advance strongly in the second half of 2011, yet 60 percent do not expect momentum to pick up until the first half of 2012. 69 percent of companies expect revenue growth in the next 12 months. This figure is nearer four-fifths of firms in other major economies. The Business Tracker also investigated where companies are planning to channel their budgets in the next 12 months. Departmental spend is predicted to rise in sales and marketing, product development and customer service but not in HR or property.
Internationally, it is noticeable that a greater than average proportion of UK firms expect to freeze or cut their property spending. This matches other research studies which reveal a general trend towards lower cost working practices. Celia Donne, Regional Director at Regus comments: “That business confidence is returning is good news for the UK economy as is the fact that so many companies are reporting rising revenues and profit. However, the Business Confidence Index suggests that UK recovery has not been as speedy as initially hoped, nor is it likely to advance strongly until 2012.
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