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June 14, 2010    

Survey reveals record fall in UK business confidence

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by Kay Murchie

A survey among UK companies has found that confidence has plunged to a level not seen since 1995, as a result of the Government’s tough spending cuts.

BDO’s Business Trends index, which covers 11,000 companies from a range of industries, slumped to 97 in May from 103.3 in April - the largest fall since the survey commenced.

The survey, which is compiled by the Centre for Economics and Business Research, comes as Chancellor George Osborne has announced plans to shave £6.2 billion off public spending this financial year and further measures are expected in an emergency budget on 22 June.

However, BDO suggests the drastic cuts could lead to lower growth and forecasts for this year and next and therefore need to be revised down sharply.

The newly-established Office of Budget Responsibility (OBR) is scheduled to publish its forecasts later.

Commenting on the findings of its survey, Peter Hemington, a partner with BDO, said: “The government has understandably been keen to emphasise the extent of the sacrifices that we all will need to make as public borrowing it brought under control.

“But there is a significant risk that the rhetoric has begun to impact on business confidence, and fears of the economic impact of spending cuts may be causing businesses to rein back on growth plans,” he added.

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