The recent financial market turmoil has knocked the confidence of UK businesses, it has been indicated.
The Business Trends report, from business advisors BDO Stoy Hayward, has found that business optimism is at its lowest levels since November 2005.
According to the report, business optimism has been decreasing slowly since July 2006 but it appears that the impact of turbulent financial markets has accelerated this trend.
The effect on optimism levels has been felt by businesses across the spectrum, with both large and small businesses feeling less confident.
However, experts at BDO Stoy Hayward believe the Bank of England will stay focused on tackling high inflation, and may even raise interest rates again in November.
Peter Hemington, partner at BDO Stoy Hayward LLP, said: “The Bank of England faces a real dilemma in the next few months. Does it address the shaken confidence of UK business by keeping rates unchanged, or does it tackle inflationary pressures by increasing rates as was widely expected a month ago?”
Despite the findings of the Business Trends report, the firm believes tackling inflation must still take priority.
Hemington added: “Our data shows that whilst UK business confidence has been knocked, it is still expanding overall. Therefore the Bank can afford to remain focused on tackling inflation and we believe that a further rate rise toward the end of the year may be on the cards.”
© Crimson Business Ltd. 2007
