The latest ICAEW/Grant Thornton UK Business Confidence monitor shows that business confidence is weakening but the economy is slowly improving.
Business confidence has now fallen for four consecutive quarters but the rate of decline in the first quarter of this year has slowed. The construction industry has witnessed the biggest drop in confidence registering -16.5 on the monitor compared to +6.3 last quarter. The finance, banking and insurance sectors also registered declines.
Businesses are finding the burden of taxation increasingly challenging with 21% now saying it is a problem as opposed to 15% this time last year.
The continuing decline in business confidence, coupled with a drop in consumer confidence, may have an adverse effect on umbrella company contractors as some companies curtail spending temporarily.
The chief economist at Nationwide, Robert Gardner, said that consumer confidence last month was heading in the direction of the historic lows witnessed at the heart of the recession. SMEs in the service sector have been hit the hardest by this recent downturn. Smaller businesses, and freelancers operating through limited companies, have seen a drop in their turnover of 38%.
Whilst private sector growth is still expected, there are different estimates as to its strength. It is thought that local authorities are aiming to reduce staff numbers by around 13% this quarter. Additional jobs will probably be created in the manufacturing sector and umbrella company contractors should be able to find temporary work. People who have been made redundant from the public sector however could struggle to find a permanent role.
Business confidence may be waning but accountants are feeling more confident about their career prospects. 35% of chartered accountants surveyed by the ICAEW, in association with Robert Half, said they anticipate changing employer within the next couple of years. 48% of those planning a move are in the early stage of their career and 40% in middle management.
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