New research from the Grant Thornton International Business Report (IBR) has found that the UK ended 2014 as one of the world’s most optimistic economies. Although UK business optimism declined on a quarterly basis (from 82% in Q3 2014 to 68% in Q4 2014), the UK still ranked amongst the top five international economies in Q4, just ahead of the US.
Supporting this optimism amongst UK business leaders, the data shows positive year-on-year expectations amongst businesses for: employment (+12%), revenue and profit (both +9%) and exports (+2%). Moreover, only 8% of UK businesses pointed to access to short-term finance as a potential constraint; the lowest amongst global economies surveyed.
“In many ways, 2014 was the first year since the 2008/09 financial crises where businesses felt they were really back on track. The measures adopted to cope with the downturn helped many of them turn into leaner and more nimble operations, the fruits of which are now ripening. Consequently, UK businesses are entering the new year on a stronger footing,” said Scott Barnes, CEO of Grant Thornton UK LLP.
Globally, the IBR revealed that while business confidence in 2014 climbed to levels not seen since before the financial crisis, a recent spate of uncertainty is weighing on growth prospects for the year ahead. The falling price of oil, the future of the Eurozone, tensions in Ukraine and concern around the pace of the slowdown in China, the confidence of business leaders, especially in the world’s largest three economies, has slipped.
In Q4, global optimism dropped from 43% to 35%, driven by steep falls in the US (down 10 percentage points to 59%), China (down 30pp to 25%) and Japan (down 12pp to -12%).