By Jason Theodorou
Business confidence has seen a sharp drop, according to a recent survey from accountants BDO. The Business Trends survey saw business confidence fall from 103.3 to 97, the most unprecedented decline since the survey began in 1995.
BDO has suggested that the growth forecasts need to be revised down to between 1.5% and 2.5%, from the 3.5% proposed by the last government which BDO believes was 'always unrealistic'.
While the Business Trends report highlights the current lack of confidence among businesses, this contrasts sharply with their view of current order book strength, as this has remained at the crucial 100 mark. The BDO says that this means that, although orders remain robust, businesses are cautious of the future and the likely effects of public sector cuts on the economy.
Peter Hemington, Partner, BDO LLP commented: 'The government has understandably been keen to emphasise the extent of the sacrifices that we all will need to make as public borrowing is brought under control'.
'But there is a significant risk that the rhetoric has begun to impact on business confidence, and fears of the economic impact of spending cuts may be causing businesses to rein back on growth plans'.
Hemington suggested that the Coalition Government needed to find a balance between displaying strength in cutting the deficit, and reassuring businesses of its commitment to restoring economic growth.
Chancellor George Osborne will present the emergency Budget on Tuesday 22nd June, which will confirm the Government's plans for addressing the budget deficit.
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