Business

Business confidence falling in UK, surveys suggest

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Media captionCIPD's Gerwyn Davies: "Access to finance... is holding us back"

Business confidence among UK firms is falling, two surveys have suggested.

The Business Trends optimism index from accountants BDO fell to 95.1 in July from 95.6 in June.

The Chartered Institute of Personnel and Development (CIPD) said that more employers planned to cut jobs than increase staffing levels in the third quarter.

Both BDO and the CIPD said that the drop in confidence was thanks largely to a fragile manufacturing sector.

"Increasing uncertainty about growth prospects in both the UK and global economies is now affecting hiring intentions, particularly in those industries such as manufacturing that stand to lose most in the event of a global slowdown," said Gerwyn Davies, public policy adviser at the CIPD.

Mr Davies added in an interview with the BBC that the situation for companies was being made worse by an inability to get the money they need.

"The biggest factor that will drive jobs growth is access to finance," he said.

"The demand is there, but the banks simply aren't lending."

'Rapid decline'

BDO's optimism index in July was at its lowest level since January, with its data suggesting that the manufacturing sector had contracted for the second month in a row.

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Media captionBDO partner Peter Hemington says businesses have been "spooked" by global uncertainties

BDO partner Peter Hemington said the UK's economic recovery continued to falter.

"The rapid decline of the manufacturing sector, championed as the key to a rebalancing of the UK economy, is alarming," he said.

He told the BBC that manufacturers were not benefiting from the fall in the value of the pound.

"These days manufacturing in the UK is more about bolting things together that are made in the Far East," he said.

"The problem with that is that if you have a marked decline in sterling, it does help you with your sales price, but the price of the components you have to buy in from the Far East goes up."

BDO's indices are calculated by taking a weighted average of the results of the UK's main business surveys from the CBI, the Bank of England and the Chartered Institute of Purchasing and Supply.

Its survey of surveys is compiled by the Centre for Economics and Business Research and covers 11,000 companies from a range of industries.

The CIPD's survey is based on responses from more than 1,000 employers.

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