Economy

UK economic confidence dips amongst global accountancy professionals

Looking at specific jurisdictions, confidence fell the most in Western Europe by 28 points, which was the first region to see rapid spread of Omicron

Economic confidence fell by 12 points in Q4 2021, due to spread of the Omicron Covid-19 strain, according the latest results from a regular global survey of accountants’ and finance professionals’ views about the global economy.

Conducted during late November and early December at the start of the outbreak, the ACCA and IMA Global Economic Conditions Survey (GECS) found the confidence index dipped “significantly” by 22 points amongst UK respondents from 24 to 2 alongside falls for expectations about capital expenditure and employment.

ACCA and IMA said the only index to rise in the UK was for orders, from -3 to 2. This index is the proxy for real economic activity and is one of relatively little change across all regions. The survey said this points to “modest” GDP growth early in 2022.

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ACCA added that while much of the rise in inflation can be attributed to “one-off supply factors”, there is a demand-pull element because some households have accumulated a large stock of ‘excess’ savings during periods of lockdown restrictions and these savings are a source of consumer demand. ACCA predicts GDP growth of around 4.5% this year, boosted by a recovery in business investment.

Looking at specific jurisdictions, confidence fell the most in Western Europe by 28 points, which was the first region to see rapid spread of Omicron. Confidence increased modestly in two regions – Asia Pacific by five points and North America by 10 points.

Only the Middle East recorded a fall in the orders index of six points, with South Asia showing the biggest increase at +8 points.

Claire Bennison, head of ACCA UK, said: “Accountants are often the first to sense the impact of economic activity, informed by the work they do on a daily basis sustaining economies and from the feedback from their clients, especially in the small business sector. The global picture is one of tentative optimism, but for the UK we can see very clearly the uncertainty of Omicron and inflation playing on respondents’ minds.

“In 2021 the UK economy grew by almost 7%, a significant bounce back after the 9.7% contraction of 2020. With the likely risk of rising inflation eroding real disposable incomes and squeezing consumer spending, our members continue to be concerned about the impact on small business survival and remain ready to advise on navigating recovery. The chancellor’s Spring economic forecast will be essential to understand what lies ahead.”

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