There is no end in sight for firms in the UK, which are experiencing the ecenomic gloom that has enveloped their businesses in the past few months. Two independent surveys reveal that firms are facing the toughest business environment since early 1990s.

According to Institute of Chartered Accountants (ICAEW), firms have lost more confidence in the last quarter of the year. Another survey by the Lloyds Business Barometer reveals that company confidence in trading prospects has reached its lowest in July.

Lloyds TSB Corporate Markets has reported that the percentage of firms that believe their trading will increase over the next 12 months has fallen from 32% to 22%, which is well below the 51% in 2002. According to its chief economist Trevor Williams, the rising costs of materials and weakening of exports in the European markets are responsible for the loss in confidence. He notes a strong correlation exists between business confidence and the performance of the economy. With so many companies losing confidence, he predicts the UK economic growth would continue to suffer through next year.

According to the ICAEW’s Business Confidence Monitor, the confidence for the three months leading to June 30 dropped by 25.7%, reported in the case of firms that are slightly less or much less confident about their trading prospects. Executive director of operations and finance, Robin Fieth, remarked that there is a new realism among businesses as they are projecting a significant drop in staff recruitment and capital investment in their budgets.

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