UK business confidence affected by credit crunch

A recent report has shown how business confidence levels across the UK have been affected by the effects of the credit crunch that was sparked in the sub-prime sector of the United States.

The credit crunch made its way across the Atlantic and took effect in the UK and in other countries around the world back in August, and since this time the levels of optimism and confidence amongst businesses in the UK have fallen significantly according to recent figures.

The figures were revealed in the quarterly Business Opinion Survey released by the Institute of Directors in the UK. According to the figures on the reports around a quarter of company bosses were optimistic and confidence about business prospects at the beginning of August before the effects of the credit crunch took hold in the UK. However, more recent figures indicate that this level has now dropped to just 4%, reflecting the adverse effect that the credit crunch has had in terms of UK business confidence.

Around 15% of company bosses stated that the credit crunch had affected sales and performance for their business. Back in August around 77% of company bosses said that their business was performing well rather than badly, but even this has dropped to around 73%. A spokesman from the Institute of Directors stated: “This is a pretty gloomy survey, with the decline in business confidence worrying.”

He also added: “Thankfully, actual business performance remains high. Across the whole economy there is a real divide between the actual impact of the financial crisis to date and expectations of what it might bring in the future. The key question now is whether optimism will bounce back because, if it doesn’t, business investment could be hammered.”

Tom Smith
19th November 2007