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30/06/2008 - In denial or just depressed? ...View

31/01/2008 - Business confidence at two year low ...View

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30/06/2008 - In denial or just depressed?

The Q2 2008 Institute of Chartered Accountants in England and Wales (ICAEW) BCM (Business Confidence Monitor) survey shows confidence at its lowest point since the survey began in the 1990's.

While 6 months ago the pessimism triggered by the credit crisis was restricted to property and financial sectors the latest survey showed this had spread to all sectors, all regions and all company sizes within the survey.

Companies are anticipating that input costs will rise twice as fast as sales prices with an inevitable impact on margins but do, on average, envisage a low level of sales growth this year.

The conundrum facing business planners and forecasters is how to reconcile the disparity between the growth forecasts (albeit at a low level and boosted by inflation) that businesses expect from their own businesses with their general lack of confidence in the wider market.

Companies are typically planning modest increases in headcount this year based on their sales forecasts but if they followed their business 'mood' they should be reigning in costs and reducing headcount.

Is the depressed mood overdone, or are companies in a state of denial over their own ability to buck the general trend?

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