By Daniel Hunter
British business leaders are remaining confident despite growing concerns over the state of the eurozone economy.
According to the Grant Thornton International Business Report (IBR), the changes across the eurozone uncover a 'see-saw effect' with the likes of Spain, Greece and Ireland seeing economic prospects grow as the powerhouses like Germany and France struggle.
Business confidence in the eurozone plummeted from 35% to just 5% in the last three months. In Germany, which is heading for a third recession in six years, confidence was more than halved.
Despite the Chancellor George Osborne's warning that the struggling eurozone economy would have an impact on the UK's growth, UK business leaders are still confident about growth prospects. According to the IBR, confidence was 82% during the three months - just 1% less than the all-time high record by the IBR in Q1. It also represents a 35% increase on the same period last year.
But there are signs that the confidence isn't driven by exports - perhaps unsurprising given the troubles in the eurozone, the UK's biggest trading partner. The IBR showed that 28% of those surveyed have positive export expectations, down from 34% in the previous quarter.
Scott Barnes, CEO of Grant Thornton UK LLP, said: "As one of the linchpins of the eurozone economy, the drop in business confidence in Germany is clearly a concern across the trading bloc. — particularly when it's coupled with shrinking order books and a weak outlook on jobs in the country. The UK's economy is still heavily dependent on trade with eurozone countries, so despite a stronger domestic outlook, contraction across the trading block could adversely impact the UK's prospects. Avoiding this dependence on the eurozone requires more support, such as building on the efforts of UKTI (UK Trade & Investment) to help our mid-sized business (MSB) community open new trade opportunities further afield — particularly in faster growing developing economies where 'brand Britain' carries a premium.
"Moreover, for the UK to really capitalise on current momentum and cultivate a business environment that's fit for the long-term, a lot more work will need to be done — particularly by the Government. Policymakers now hold the key to unlocking substantial growth potential, by addressing our current skills shortage through financial and tax incentives for MSBs to take on and train even more apprentices, and introducing initiatives to ease the financing shortfall, such as reintroducing the corporate venturing scheme. In turn, these boosts to UK MSBs would translate into increases in jobs, income, quality of living and other signals of a healthy, diversified and sustainable economy."
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