According to the latest Business Confidence Monitor (BCM) from the ICAEW, businesses across the country are continuing to reduce their costs and cut back their plans for the future as confidence falls to its lowest level.
Eight out of fourteen key financial performance indicators tracked in the survey are forecast to decline – the first time we have seen contraction predicted since the survey began. The latest findings from the quarterly BCM show another drop in the Confidence Index at the beginning of the year, falling a further nine points to -45.3 from -36.3.
Michael Izza, Chief Executive of the ICAEW, commented:
“As our confidence monitor shows, businesses don’t believe that this will be a short recession and expect it will take some time to rebuild confidence. Experience suggests that those companies which act decisively and are quick to respond to changing circumstances will emerge stronger and fitter at the end of the recession. Although it is all too easy to focus on quick remedies, businesses should think carefully about any major decisions they make to save costs.
The ICAEW has outlined eight strategies to help businesses survive in the coming months. These include managing risk and uncertainty, recognising the value of employees and reviewing structure and cost base. Companies should talk to their advisors before any major decisions are made as they may be able to offer alternatives.”
Financial performance indicators in the survey reveal that more than a third (35%) of companies report access to capital as a greater challenge to their business performance than a year ago. With credit remaining problematic, late payment is becoming more commonplace with 37% stating that this is a greater challenge now than a year ago – an increase of 19 percentage points from Q1 2008.