Firms confident despite euro risks, IoD finds
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UK businesses are “relatively confident” about their own prospects regardless of the weak economic outlook, research by the Institute of Directors (IoD) suggests.
The study, which polled more than 1,000 business leaders between January 24 and February, chimes with fund managers’ view that many companies remain in a strong position despite the eurozone debt crisis and fears over global growth rates.
According to the IoD’s poll, only 11% of directors think the UK will avoid recession this year. Some 53% say there is a moderate risk of recession, while 35% think the risk is high or very high.
Half of respondents believe there is a high or very high probability of the eurozone breaking up this year, while just 2% regard the risk as being very low.
In spite of this, 50% of businesses expected to see higher or much higher revenues in 2012 than they achieved in 2011. Only 27% forecast lower or much lower revenues.
Furthermore, 40% of companies expect profits to rise this year compared with 32% anticipating a fall.
Graeme Leach, chief economist at the IoD, says: “The resounding message from the survey is the critical role of confidence at this stage in the economic cycle.
“If the euro crisis stabilises, confidence could return relatively quickly and companies could dust down business investment and recruitment plans put on hold last year,” he continues.
“Alternatively, if the euro crisis gets worse, confidence is highly unlikely to return this year.”
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