'Drop' in financial service optimism

News Article - 07 January 2008
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Half of financial firms are less optimistic about their overall business situation than they were in September, a new survey has shown.

The Financial Services Survey from the Confederation of British Industry (CBI) and PricewaterhouseCoopers has revealed that 44 per cent of respondents said their business volumes have decreased.

Seven in ten believe that the instability and volatility of the market will last longer than six months and 24 per cent predict that conditions will deteriorate further.

For one-quarter of respondents, the ability to raise funds would continue to be a serious strain on business growth, despite profitability increasing by six per cent - 20 per cent higher than predicted.

Ian McCafferty, CBI chief economic adviser, commented that the credit crunch has given a "sharp shock" to business progress.

"This is however a very resilient sector that sees better prospects over the horizon and it is encouraging that profitability, job creation and investment plans are all still positive," he added, explaining that one of the most common business goals was to invest more in IT.

Reported in the Financial Times, credit insurer firm Euler Hermes has predicted corporate insolvencies to rise by 8.3 per cent this year, as a result of the credit squeeze.

Article keywords: Accountancy professionals with an interest in the suitability of the International <a href="http://www.access-accounts.com/" target="_self">Accounting</a> Standards Board's draft on financial reporting rules for small firms should get involved in the debate surrounding the publication, an expert has claimed.<br/><br/>Dr Nigel Sleigh-Johnson, head of financial reporting at the Institute of Chartered Accountants in England and Wales, is urging interested parties to get involved in discussing whether the draft International Financial Reporting Standard for small and medium-sized enterprises (SMEs) is suitable for micro companies.<br/><br/>Speaking to Accountancy Age, Mr Sleigh-Johnson questioned whether the draft standard could eventually replace the UK's current Financial Reporting Standard for Smaller Entities (FRSSE), as the two standards share some similarities.<br/><br/>However, among the benefits of the new draft is &quot;a considerable reduction in disclosure requirements and some significant measurement simplifications&quot;, the reporting chief said.<br/><br/>Despite its benefits, Mr Sleigh-Johnson added that typical businesses with 50 employees had found some of the proposed standard's requirements too onerous.<br/><br/>Earlier this year, the FRSSE was amended in a bid to simplify the terms around the Share-based Payment standard.<br/>

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