Member Article

Accountants show confidence amid global economic turbulence

UK accountants believe the country’s economic climate is improving compared to the rest of the world, but still lags behind Western Europe and Ireland.

The latest edition of Global Economic Conditions Survey, conducted by ACCA and the Institute of Management Accountants suggests the global economy recovered substantially in early 2012 and regained some of the dynamism it had lost over the last year.

Emmanouil Schizas, editor of the ACCA/IMA Global Economic Conditions Survey, said: “The global survey findings, representing the views of about 2,200 professional accountants around the world, are to be welcomed.

“But there are mixed sentiments for the UK where the economic picture suggests an improving climate with 19% of the UK sample reporting confidence gains, up from 10% in late 2011, while 23% now believe the global economy is improving or about to do so.

“However, the UK economy appears to be lagging Western Europe as a whole, including Ireland.”

Among UK accounts, more than half now expect the government to under-spend over the next five years, up from 44% in late 2011.

UK respondents reported fewer problems than in previous quarters, especially around financing, and they also report fewer opportunities, as only exports and innovation were cited by more respondents in early 2012 than in late 2011.

As for the global picture, the share of respondents reporting confidence gains in their own organisation had nearly doubled from 16% in late 2011, to 29%.

While the majority at 54% still believed the global economy was deteriorating or stagnating, that figure was down from 73% in the previous quarter.

Schizas added: “When all the results came in, we were a little sceptical and had to consider all of the likely objections first.

“Much of the rise in confidence is being reversed as we speak, as the relief factor subsides, but a lot of it is here to stay.”

ACCA and IMA suggest the rise in global business confidence is due to objective improvements to the business environment, especially new orders.

Across the Americas and Asia-Pacific businesses were noted to be responding to increased orders with investment and hiring.

This was welcomed by ACCA and IMA who noted that investment had been subdued at the global level since the end of the ‘green shoots’ stage of the global recovery, between mid-2009 to mid-2010.

Both bodies believe the investment increases focus on two opportunities: customer insights and the need to understand and benefit from spending decisions under new constraints, and supply chain optimisation through deepening relationships and stronger focus on quality.

Schizas concluded: “It’s too early to say whether the pattern of the modest recovery in 2012 is sustainable, but it seems to rely on a sustained recovery of demand in the West, supply in the East and confidence in sovereigns. It’s a precarious balance.”

This was posted in Bdaily's Members' News section by Tom Keighley .