Business optimism is rising at its fastest rate since 2007, as fears over an imminent eurozone break-up abate, though companies are still opting for the safety-first option of hoarding cash.
The latest quarterly survey of leading finance directors by Deloitte shows that, contrary to last week’s forecasts from the Organisation for Economic Co-operation and Development, few expect Britain to suffer a double-dip recession.
Those still fearful of two successive quarters of contraction have dropped to 30pc from 54pc in December – despite OECD forecasts that Britain’s economy shrank by 0.1pc in the first quarter of this year on top of a 0.3pc fall in the last three months of 2011.
Finance chiefs expecting eurozone members to quit the single currency this year have also fallen from 37pc to 26pc in the past three months.
“The worries about the risk of recession and a break-up of the single currency that dominated corporate thinking at the end of last year have eased,” said Ian Stewart, Deloitte’s chief economist.
He said finance directors were also “reporting an increase in credit availability”, adding: “This more than unwinds the deterioration in credit availability seen in December which, at the time, some feared could be the start of a second credit crunch.
”Deloitte canvassed the views of 136 finance chiefs, including 39 at FTSE 100 companies and 53 at FTSE 250 companies.
Despite the more positive feedback, UK companies are still reluctant to dig into their cash hoards, which Royal Bank of Scotland analysts put last week at £750bn.
Deloitte said corporates were “less likely to be raising capital spending, undertaking M&A or introducing new products than 12 months ago,” with Mr Stewart seeing that as “a symptom of caution”.
The financial services sector is also becoming less gloomy, with the latest CBI/PwC survey showing that business volumes have increased for the eighth quarter running – at a higher than average pace.
Of the 95 financial firms that responded, 44pc saw volumes rise in the quarter to March, with only 21pc reporting a fall. The resulting positive balance of 23pc was well ahead of the long-run average of 12pc.
Financial firms also reported a surprise increase in employment. “More positive economic data and a slightly more stable environment in the eurozone mean that banks are much more confident,” said Kevin Burrowes, UK financial services leader at PwC, noting that this was now “translating into recruitment”.
Accountants BDO warned, however, that Britain would see a two-speed recovery, with companies oriented to export markets and digital services faring much better than those dependent on the high street or “cautious UK consumers”.
BDO expected property, construction, leisure, and business services to experience “difficult market conditions”, while the technology, media and telecoms sector should lead recovery.
telegraph.co.uk
The latest quarterly survey of leading finance directors by Deloitte shows that, contrary to last week’s forecasts from the Organisation for Economic Co-operation and Development, few expect Britain to suffer a double-dip recession.
Those still fearful of two successive quarters of contraction have dropped to 30pc from 54pc in December – despite OECD forecasts that Britain’s economy shrank by 0.1pc in the first quarter of this year on top of a 0.3pc fall in the last three months of 2011.
Finance chiefs expecting eurozone members to quit the single currency this year have also fallen from 37pc to 26pc in the past three months.
“The worries about the risk of recession and a break-up of the single currency that dominated corporate thinking at the end of last year have eased,” said Ian Stewart, Deloitte’s chief economist.
He said finance directors were also “reporting an increase in credit availability”, adding: “This more than unwinds the deterioration in credit availability seen in December which, at the time, some feared could be the start of a second credit crunch.
”Deloitte canvassed the views of 136 finance chiefs, including 39 at FTSE 100 companies and 53 at FTSE 250 companies.
Despite the more positive feedback, UK companies are still reluctant to dig into their cash hoards, which Royal Bank of Scotland analysts put last week at £750bn.
Deloitte said corporates were “less likely to be raising capital spending, undertaking M&A or introducing new products than 12 months ago,” with Mr Stewart seeing that as “a symptom of caution”.
The financial services sector is also becoming less gloomy, with the latest CBI/PwC survey showing that business volumes have increased for the eighth quarter running – at a higher than average pace.
Of the 95 financial firms that responded, 44pc saw volumes rise in the quarter to March, with only 21pc reporting a fall. The resulting positive balance of 23pc was well ahead of the long-run average of 12pc.
Financial firms also reported a surprise increase in employment. “More positive economic data and a slightly more stable environment in the eurozone mean that banks are much more confident,” said Kevin Burrowes, UK financial services leader at PwC, noting that this was now “translating into recruitment”.
Accountants BDO warned, however, that Britain would see a two-speed recovery, with companies oriented to export markets and digital services faring much better than those dependent on the high street or “cautious UK consumers”.
BDO expected property, construction, leisure, and business services to experience “difficult market conditions”, while the technology, media and telecoms sector should lead recovery.
telegraph.co.uk
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