New research by the CIMA shows that most businesses believe they will survive the next 12 months. 69% are now extremely confident that they will survive, a big jump from the 34% that expressed such a high level of optimism in March.
Nevertheless, many firms are still cautious of the challenges that lie ahead. More than 50% say that falling customer demand is a matter for concern, whilst 37% are worried about the price of materials and supplies. Just over a third say economic and political instability concerns them and 29% are worried about regulatory requirements.
Business opinion is divided over whether government austerity measures increase optimism or not. High inflation, unemployment and rising fuel prices are also causing concern for a number of companies.
Public sector organisations expect to see reduced headcounts because of the government’s spending cuts but sectors such as banking and transport do not expect the austerity measures to impact their hiring activities.
The CIMA’s MD, Andrew Harding, said the fear of a double-dip recession appears to be receding with a sharp decrease in the number of firms expecting the country to fall back into recession.
The second quarter showed a marked decrease in the number of financial services companies experiencing distress, according to Begbies Traynor.
In fact the Red Flag Alert Report for Q2 shows the number potentially in distress dropped 48% to 1,915 compared to quarter one. The total is now very near the 1,900 recorded this time last year.
Although the number of companies with significant financial problems is decreasing, there are now 5,179 firms with critical financial problems, up from 4,620 in the first quarter of the year. The executive chairman of the Begbies Traynor Group, Ric Traynor, said that although the drop in the number of firms with significant financial problems could be a glimmer of hope, weaker businesses have moved from the significant to the critical stage.
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