Hopes that 2010 will see a rapid recovery in the world economy have been dashed by the findings of one of the largest-ever global surveys of professional accountants. The Q4 Global Economic Conditions Survey by ACCA (the Association of Chartered Certified Accountants) has provided the global accountancy body with its first firm evidence that economic conditions are finally improving, the survey, which attracted more than 1,700 responses from members in 99 countries, but it also suggests that a full recovery is moving further away by the day.
Accountants in the UK are, to some extent, sharing in the cautious optimism reflected in the findings of the Q4 Global Economic Conditions Survey, which included the views of 373 members in the UK. Economic sentiment has surged in the last quarter, with 36% of respondents (up from 28% in September) believing that global economic conditions are either already improving or about to.
The consensus, however, expressed by 50% of respondents, remains that the UK is at the bottom of what promises to be a long downturn. While this is a more favourable outlook than that expressed by their colleagues elsewhere in Western Europe, perceptions in the UK are still quite gloomy by global standards.
On balance, accountants here are expecting a recovery in just short of 18 months, however, as in much of the world, the recovery appears to be a moving target – it has only inched closer despite a three-month interval between the last two surveys.
Perceptions on the timing of the recovery have remained largely unchanged in the UK, with 53% expecting a recovery in one year or less. However, a persistent 10% continue to predict that the downturn will last for at least another 3 years.
Once again, this is a more favourable outlook that we’ve seen elsewhere in Western Europe, but lags the perceptions of accountants overseas by a substantial margin.
While perceptions are that the outlook is more favourable, business incomes are still falling in the UK, despite some improvement in the last quarter.
Only 17% of respondents are revising their income expectations upwards, while another 40% are doing the opposite. Investment in both staff and capital is still in freefall.
This is despite a strong seasonal effect ahead of the Christmas and New Year holidays, which has positively affected trading conditions. The decline in new orders is slowing rapidly, and the incidence of business failures and late payment has fallen steeply.
Particularly relevant is the sharp improvement in access to finance, with only 39% of respondents reporting difficulties for their organisations or clients, down from 55% in Q3.
Around 20% have seen the availability of finance actually rising in the past 3 months, a sharper improvement than the Western European average.
The UK government has been given a good deal of credit for these improvements: after remaining flat at around 15% for half a year, the government’s approval rating (the share of respondents rating the government’s response as good or very good) has risen to 23%.
These trends have contributed to a slight rise in business confidence, which, for the first time since these surveys began, has crossed into positive territory. This is in line with responses elsewhere in Western Europe.
Businesses, however, have yet to translate this new found confidence into a search for new opportunities: only the appetite for innovation has remained constant in the past three months (mentioned by 16% of respondents). Importantly, however, businesses’ emphasis on cost-cutting appears to have peaked earlier in the year – as this recedes, employment and investment among UK businesses should begin to recover.
Accountants in the UK may not think so kindly of government for long. In the medium term, accountants expect government spending to fall very sharply – a little too sharply, in fact: 44% of respondents believe that spending will fall faster over the next five years than it should, against 31% who believe it will adjust as it should.
For more information about the report’s global findings please go to the ACCA website.
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For further information, please contact:
Colin Davis
Head of International Communications
+44 (0)20 7059 5738
+44 (0)7720 347 713
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Helen Thompson, ACCA Newsroom
+44 (0)20 7059 5759
+44 (0)7725 498654
[email protected]
Notes to Editors
1. ACCA is the global body for professional accountants. We aim to offer business-relevant, first-choice qualifications to people of application, ability and ambition around the world who seek a rewarding career in accountancy, finance and management. We have 362,000 students and 131,500 members in 170 countries worldwide.
2. ACCA has worked with governments, national organisations and development agencies in emerging economies- for over 20 years- promoting the accounting profession, to create value for the communities, businesses and individuals it serves.
3. ACCA believes that globalisation of business means that one set of reporting standards is essential. We favour the principles-based IFRS.
4. ACCA understands the real issues facing small businesses as 63,000 of our members work in SMEs or small partnerships worldwide.
