Business optimism 'stabilising'

News Article - 12 February 2008
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Firms' confidence in business performance fell by one per cent between December and January, representing a "welcome stabilisation" in optimism, it has been claimed.

According to the research conducted by Lloyds TSB Corporate Markets, this sentiment varied over different industries, with 64 per cent of service companies predicting stronger business this year, compared to industrial and distribution sectors where firms anticipated weaker growth.

However, Trevor Williams, chief economist for the firm, remarked that as the survey was conducted prior to the Bank of England's base rate cut confidence levels may continue to improve.

He also commented that it is surprising pessimism levels were not higher due to concern over reducing house prices and tightened consumer spending.

"This suggests there may be pockets of continuing economic growth, which means the assertions of an impending recession are way off mark and continued, albeit slower growth is more likely," he said.

Last week, the Bank's monetary policy committee cut the base rate to 5.25 per cent after examining business productivity, house prices and spending.

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