Business optimism among finance directors is slipping in spite of a generally bullish outlook for the UK economy, according to the annual Accountancy Age/Reed Accountancy Personnel Big Question ‘Prosperity Index’.
At 68%, the proportion of FDs expecting a prosperous new year for the UK economy is eight percentage points lower than at the same time last year. The percentage expecting 1998 to be less prosperous than 1997 was 17%, up 11 points.
Of the 200 FDs polled, 18% thought 1998 would be very prosperous, while 50% thought it would be slightly prosperous. A further 15% expected no change on 1997. When the same question was asked last year a similar number were very optimistic, 58% were slightly optimistic and 18% forecast no change.
New Labour seemed to be the chief source of optimism. Michael Barnes, FD of Twynham housing association summed up the mood: ‘New government, new optimism.’
Kevin Hamilton, FD of BBL, said: ‘The feelgood factor is returning. Labour’s policies haven’t been as bad as expected and things are going well.’
But many saw the UK’s ambivalence to the single currency as a damper on the economy, while others feared the effects of the strong pound and skill shortages.
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