Decline in business confidence due to credit crunch
March 15, 2008
According to a recent report the credit crunch that has swept across the UK and much of the rest of the globe has hit businesses hard in terms of confidence, with business confidence taking a real hit as a result of the effects of the credit crunch. The credit crunch was sparked in the US sub-prime mortgage sector and has spread quickly to other parts of the world, leaving behind a trail of turmoil in the financial markets.
The Quarterly Business Opinion Survey was recently released by the Institute of Directors in the UK, and reflected the decline in business confidence and performance as a result of the credit crunch. Before the credit crunch spread to the UK around 25% of company bosses had a positive outlook for their companies according to the report. However, the figures went on to show that this figure has fallen to just 4%, with many company bosses now sporting a more pessimistic outlook because of the effects of the credit crunch.
One official from the Institute of Director stated: “This is a pretty gloomy survey, with the decline in business confidence worrying.” He also said: “Thankfully, actual business performance remains high. Across the whole economy there is a real divide between the actual impact of the financial crisis to date and expectations of what it might bring in the future. The key question now is whether optimism will bounce back because, if it doesn’t, business investment could be hammered.”
Other figures in the report showed that around 15% of bosses felt that the credit crunch had affected their business and performance adversely. Before the credit crunch around 77% of company bosses thought that their businesses were performing well as opposed to badly, but this figure has dropped to 73% since the credit crunch caused turmoil in the financial markets.
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