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Business confidence 'knocked by stock market tumble'

Published On 27 March 2007 at 12:30:09

The recent volatility of the UK stock market has hit the confidence of the country's small and medium-sized enterprises (SMEs), according to a new survey.

Lloyds TSB's latest Business Barometer shows that businesses, including the UK's SMEs, reduced their expectations after the recent financial turbulence. Business confidence fell by ten points - from 66 to 56 per cent - between February and March.

Predictably, business and financial services firms have been most affected by the volatility, seeing it as a precursor to a global economic slowdown. Now only 52 per cent of these firms expect higher business activity in the coming year.

"The unpredictable stock market performance this month has forced UK firms to take a sense check on their activity expectations for the coming year," explained Trevor Williams, chief economist at Lloyds TSB Corporate Markets.

"This looks like it will be just a blip rather than a sustained trough in confidence because underlying UK economic conditions remain strong."

However, many SMEs fear that the chancellor's Budget last week will further damage business performance in the future.

Chancellor Brown decided to cut capital allowances and Lloyds TSB predict that this move alone will cost UK businesses a "bill of £1.2 billion by 2009/10".

 

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