Firms positive despite confidence fall

BUSINESS confidence in the East of England is down, but more firms are positive about the outlook for the next six months than negative, a survey has found.

BUSINESS confidence in the East of England is down, but more firms are positive about the outlook for the next six months than negative, a survey has found.

The Business in Britain survey from Lloyd TSB Commercial has found 13% more firms are expecting improved conditions in the coming months rather than worsening ones.

This compares with a brighter picture six months ago when a balance of 27% expected a better outlook.

The less positive outlook follows six months of slower orders, sales and profits in the region.


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Firms in the region reporting higher rather than lower sales fell to 16% from 33% in the last survey, while the balance of companies which saw higher order book levels dropped from 25% to 13%.

The region's firms are expected to maintain rather than increase profit levels. The survey showed that none of the respondents were expecting higher profits in the first half of 2008. In a similar study last year, a balance of 19% expected increases.

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The number of firms expecting higher order book levels has also fallen to 16% from 29% in the last survey. Those anticipating sales growth has dropped from 33% to 22%.

Weaker profit forecasts have taken a toll on business investment and recruitment plans in the region, with 54% planning to keep capital spending at the same level.

The number of firms expecting to recruit more staff fell from 11% to a balance of minus 1%.

A balance of 15% of firms reported strains on cash flow, down from a balance of 20% last July. But this is still far below the peak reached during the 1990s recession when 56% of firms across the country reported problems with cash flow.

The region's firms are still optimistic about their scope for increasing prices to counter falling sales, with a balance of 37% expecting to be able to raise prices, up from 26% in the last survey.

The revelation could have implications for the Bank of England, which has to consider inflationary pressures when making interest rates decisions.

Steve Elsom, Lloyds TSB commercial area director for Norfolk and Suffolk, said there was “no doubt” 2008 would prove more of a challenge for many Norfolk and Suffolk firms, but he felt it was “a ride most will be able to endure”.

“It's clear that investment spending will be capped, as businesses tighten their financial belts, but firms in the East of England are well versed in the art of cash management and financial planning and these are skills that should help them weather the storm throughout 2008 and beyond,” he said.

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