UK businesses remain strong despite the credit crunch, the latest business trends report by BDO Stoy Hayward says.
It said British firms have successfully shrugged off the “rising tide of economic pressures” and high oil prices and argues short and medium-term business confidence remains upbeat.
Though down on October, the November confidence indices were both above the 100 mark, suggesting expectations of UK economic growth remaining above its 2.5-2.75% trend, in the coming months.
Nevertheless, confidence has been ‘dented’, with the index predicting business confidence one quarter ahead falling from 100.8 in October to 100.4 in November - an eighteen month low.
The Optimism Index, which tracks confidence two quarters ahead, hit a two year low, falling by 0.4 percentage points in November, to 100.5.
Peter Hemington, partner at BDO Stoy Hayward LLP, says: “Despite fears about the impact of the credit crunch, the rising cost of oil and a weakening of consumer demand, UK business remains defiantly positive about the future.
“As a result, given that inflationary expectations remain strong, we suspect the MPC will hold rather than cut interest rates this month.
“However, optimism is clearly decreasing. If this trend continues we will surely see the rate of growth of the economy falling as we move further into 2008.”
Prepared for BDO Stoy Hayward by the Centre for Economics and Business Research (CEBR) the BDO Business Trends report provides an aggregation of the main business surveys from the last month.
In total, the surveys cover 11,000 respondents, from companies employing five million employees.
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