East of England: Business confidence falls for third quarter running, says ICAEW/Grant Thornton report

BUSINESS confidence in the East of England has slipped back for a third consecutive quarter and is now at its lowest ebb for nearly three years, according to a new survey.

The ICAEW/Grant Thornton UK Business Confidence Monitor (BCM) for the first quarter of 2012 indicates a growing level of caution among business professionals in the region, with a confidence index score of minus 8.2 – the lowest reading since the second quarter of 2009.

The BCM confidence index has fallen steadily from plus 12.9 in the second quarter of 2011 and this is reflected in expectations for sales this year.

Although sales volumes during the first quarter of 2012 were 3.3% up on a year earlier, growth during 2012 is expected to be just 1.3% and the rate of growth in exports is forecast to fall to just 0.9%.

Pippa Bourne, regional director of ICAEW (the Institute of Chartered Accountants in England and Wales), said: “This survey shows that whilst growth has been recorded over the last year, businesses are still cautious about the prospects of 2012.

“This is at a time when Government desperately needs businesses to be growing. To restore business confidence, the East of England, needs to strengthen exports and the Chancellor needs to use the forthcoming Budget to give businesses reasons to be more confident about the future – and unlock potential investments.”

Firms in the East of England report steady growth continuing over the past 12 months. Turnover increased over the year to the first quarter by an average of 3.9%, broadly unchanged from the growth achieved in the previous 12 months.

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Annual growth in gross profits has been steady over the last three quarters. Firms report profits up over the year to the first quarter of 2012 by an average of 2.7%, while the annual sales volumesgrowth of 3.3% was largely unchanged from growth rates reported a year ago.

However, expectations for future growth suggest a weak outlook among businesses in the East of England over the next 12 months.

Turnover is expected to grow over the coming year by 2.0% on average, while gross profits and sales volumes are expected to increase by 1.8% and 1.3% respectively. This continues a recent trend of declining expectations seen over the past year, reflecting falling confidence levels in the region.

Richard Proctor, managing partner for Grant Thornton East Anglia, added: “The key performance indicators in the BCM remain weak and the concern for business is that domestic and international demand will remain low. However, it is reassuring to hear businesses in the East of England are still expecting some growth.”