Bloomberg News

U.K. Companies More Optimistic on Economy in 2013, Surveys Show

January 06, 2013

U.K. businesses are more optimistic on the economic outlook this year as tensions related to the euro-region debt crisis ease, according to separate surveys of finance directors and manufacturing executives published today.

Chief financial officers at some of Britain’s biggest companies see a 40 percent chance of the economy falling back into recession, down from about 43 percent in the third quarter, according to a survey by Deloitte LLP published in London today. A report from the Engineering Employers Federation showed that the proportion of factory executives expecting an improvement in the economy in 2013 has increased.

Britain’s economy is likely to return to growth this year, according to a Bloomberg News survey of economists last month. Still, services unexpectedly shrank for the first time in two years in December and a construction index fell to a six-month low, clouding the economic outlook.

“Confidence has returned, but perceptions of economic and financial uncertainty remain high and the greatest worries for CFOs are still the weakness of the euro-area and U.K. economies,” said Ian Stewart, chief U.K. economist at Deloitte.

The proportion of CFOs expecting one or more countries to exit the euro area this year dropped to 22 percent from 27 percent, Deloitte said. That’s the lowest since it started asking the question a year ago.

In the EEF survey, 30 percent of 171 manufacturing executives expect an improvement in the economy compared with 2012, compared with 23 percent forecasting deterioration. On the manufacturing outlook, respondents were split equally. A year earlier, pessimists outnumbered optimists on both measures, the lobby group said.

Export Demand

Manufacturers expect the improvement this year will be driven by exports, with half of companies predicting growth in overseas sales. Demand from emerging markets “features strongly,” the EEF said. The biggest risks to growth included a slowdown in the world economy, exchange-rate volatility and rising input costs, survey respondents said.

The EEF carried out its survey in November. Deloitte carried out its study, which included finance directors at 36 members of the FTSE 100 Index, between Nov. 25 and Dec. 11.

In a separate report today, Lloyds Bank said an index of job security dropped 4 points in December to minus 22, the lowest reading since February. A measure of consumers’ inflation expectations rose to the highest since February 2011, the unit of Lloyds Banking Group Plc said.

To contact the reporter on this story: Scott Hamilton in London at shamilton8@bloomberg.net

To contact the editor responsible for this story: Craig Stirling at cstirling1@bloomberg.net


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