The OECD has reported that the UK economy grew by a mere 0.7% in the last year, making it the second worst performing economy in the G7 nations. Only Japan’s economy performed worse than ours and it had the earthquake and tsunami to contend with.
Germany performed best with economic growth of 2.7%, followed by the US and France with 1.6% each.
The OECD also reports that economic growth across the 34 member states has been slowing for four consecutive quarters.
It will therefore come as no great surprise to learn that business confidence in the UK is declining rapidly. The latest UK Business Confidence Monitor from ICAEW and Grant Thornton does not paint a good picture with growing pessimism caused by UK and global economic chaos.
UK businesses also have little faith in the government’s pledge to reduce the regulatory burdens and bureaucracy that have been dogging them in recent years.
The BCM Confidence Index dropped from +13.7 to +8.1 in the third quarter of 2011 and now stands at its lowest since the third quarter of 2009 when we were still in the throes of the economic downturn. Many firms are seeing their turnover and profits going down and have had to revise their future expectations.
Red tape and tax are seen as major challenges for an increasing number of companies. 40% said that regulation is now a bigger burden than it was this time last year whilst 25% said the burden of tax was having a greater impact than it did 12 months ago.
Michael Izza, the chief executive of ICAEW, said businesses are trying their hardest to boost economic growth but feel the government has done little to tackle red tape and improve tax competitiveness. The government needs to implement its Plan for Growth and simplify the UK tax system so Britain becomes more business-friendly.
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Image: Why so glum?? by Benson Kua
