UK business confidence 'squeezed in the middle'

16-08-2006

Companies in the UK are more confident about the economic outlook than they were three months ago, a new index claims, but businesses in the Midlands continue to be pessimistic about the future.

The quarterly business confidence survey performed jointly by the Institute of Chartered Accountants in England and Wales (ICAEW) and mobile network firm Orange says that the traditionally perceived north-south divide has been replaced by a three-pronged system or business cheer in the north and south, but a persistently gloomy outlook in the Midlands.

Overall, the index stands at plus 9.9, its highest level for two years, with Yorkshire and the Humber the highest-scoring region with a total business confidence level of 18.3.

The situation is markedly worse in the east Midlands, where the index reported a negative confidence value of 6.4, while businesses in the West Midlands gave an optimism indicator of minus 1.5.

However, while job losses over the collapse of the local car making market continue to be felt in the region, the confidence barometer in the Midlands has been boosted by an apparent resurgence in manufacturing, which rose to plus 11.5.

Increasing belief in manufacturing and construction similarly pushed the north-west higher up the overall confidence table, while uncertainty in the financial markets lowered London's economic optimism two points to 13.

The chief executive of the ICAEW, Eric Anstee, explained: "What we are seeing is the emergence of a three-way split in confidence across the UK. While recent redundancies in the West Midlands contribute towards this picture, a more fundamental examination of economic development strategies in these regions may well be required."

Meanwhile, Shaun Orpen, small and medium enterprise director at Orange, said that the companies' latest monitor hinted at future "healthy growth" in the UK economy overall.

"Businesses have registered a third consecutive rise in confidence this quarter to reach the highest level in over two years," he said.

"Given the healthy national picture, I am confident that businesses will continue to prosper and that this overall buoyancy will enable businesses in the east and West Midlands to overcome the specific economic challenges in their region."


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