Southampton: Business optimism declines as confidence surges across the eurozone, says Grant Thornton

Uncertainty around the forthcoming General Elections could be the reason businesses are less optimistic, says Southampton business and financial adviser Grant Thornton.

The firm’s latest International Business Report (IBI) reveals a stagnating of confidence among business leaders across the country, down to 65% in Q1 2015, from 68% in the previous quarter and a record 83% registered in the same period last year.

The findings come in contrast to business optimism across the eurozone economies in the first quarter of 2015, where confidence is moving back up towards pre-crisis levels.

Norman Armstrong, partner of Grant Thornton’s Southampton office, commented: "Businesses trade on certainty, so the uncertainty created by the highly unpredictable General Election, coupled with continued dialogue on Britain's future in the EU is starting to unnerve some business leaders.

“In order for their growth expectations to translate into more tangible realities, businesses need to invest in the skills and resources for growth – a difficult thing to do when so many 'known unknowns' still linger."

The research also finds that a lack of skilled workers (31%), economic uncertainty (28%) and regulation and red tape (23%) are among UK business leaders' top concerns and constraining their growth prospects.

Armstrong continued: "The UK economy has been on a steady upward trajectory as of late, and businesses up and down the country have found innovative ways of competing during the downturn – particularly the dynamic mid-sized businesses. However, the infrastructure for growth which can afford UK business longer-term success needs to be addressed – particularly as it relates to developing a talented workforce capable of meeting business demands. Whichever party(ies) takes up residence in Number 10 in the coming months must address these concerns if the UK is to firmly cement itself as a global business hub."

Optimism among eurozone business leaders jumped to 38%, from 13% in the previous quarter. Moreover, the eurozone economies hardest hit by the financial crisis, such as Ireland and Spain, showed some of the strongest improvements, with Ireland ranking highest globally at 92%.

Despite the slight drop in overall business optimism in the UK, many business leaders are maintaining strong revenue (+69%) and employment (+50%) growth expectations, and are expecting to invest in plant and machinery (+50%) and R&D (+24%) over the next 12 months.