FDs predict a bleak 1999

FDs believe 1999 will be dominated by the twin forces of recession and the euro, but one in four FDs believe that the UK economy will pick up in 1999. The findings emerged in this week’s The Big Question, carried out by Accountancy Age and Reed Accountancy Personnel. More than 200 FDs were asked whether 1999 would be a prosperous year for the UK economy and what would be the main business issue of the year. Some 50% of FDs believed the economy would weaken while the euro was cited as the key business issue for 1999. The year-2000 problem also emerged as the other major matter weighing on the minds of FDs in 1999. Ron Haley, of Andrews Kent & Stone, the construction consultant, was among those forecasting a bleak year. ‘The predictions about recession are far too optimistic,’ he said. ‘All the signs are that we are at the beginning of a recession.’ Another FD, who asked to remain anonymous, was more pessimistic. ‘I predict recession, increasing unemployment and de_ation, plus political instability in Russia and the EC.’ Only a quarter of the FDs who were questioned in the survey believed the economy would prosper. And even some of them were concerned that the euro would not be beneficial to British business, which could be harmed by the decision to opt out. ‘I think the UK has missed the boat by not joining the euro in the first wave, but time will tell whether staying on the sidelines is beneficial,’ said Barry Curtis, of Alberice Meters, the electronic meter manufacturer. If demand does sag, however, companies will not be able to resort to raising prices. ‘In this non-inflationary environment, getting price increases through will be difficult,’ was the view of one FD. ‘There is no allowance for genuine cost increases to go through.’

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