The level of optimism in privately-held businesses has plunged by 57 per cent in the past 12 months, according to the latest figures from the Grant Thornton International optimism barometer.
The figures, which canvassed 7,200 business across 36 countries, found the number of senior executives expressing pessimism was highest in construction and real estate companies, retail and manufacturing. Only one in five had any optimism at all for the future in 2009.
Eric Williams, the head of tax at Grant Thornton in Birmingham, said: “2008 has been a year of successive shock waves. UK PHBs have seen high street banks being bailed out by the Government, some of the UK’s most well-known businesses go into administration and a huge drop in house prices this year.
“Personal wealth has been severely impacted as a result and this, combined with the continuing stagnation in bank lending, has taken the inevitable significant toll on confidence. “UK PHBs are acutely conscious of the fact recovery is going to be slow so they are in self preservation mode, battening down the hatches in preparation for a prolonged downturn.”
Decreased consumer demand was cited by private businesses as the most important factor behind their negative outlook. Another quarter pointed to the shortage of business credit and a further 12 per cent identified a shortage of consumer credit as denting their confidence about the year ahead.
“Banks have cut back on lending to business and we are still waiting to see if the Government will do anything to attempt to unlock the flow of funds,” said Mr Williams. “In the meantime businesses will have to work under the assumption credit is going to be hard to come by in 2009, creating further uncertainty about the prospects for the coming year.”