Business Weekly - Cambridge, UK

The impact of this has led to a reduction in the regions Business Confidence score from +1.9 last quarter to -3.4 in Q1 2007, according to the latest Institute of Chartered Accountants/Orange - UK Business Confidence Monitor.

Confidence in the East of England is at its lowest level since Q4 2005 and is 8.6 points below the Confidence Index of +5.2 for the UK as a whole this quarter.

Pippa Bourne, regional manager for the ICAEW said: “The recent rises in interest rates to 5.25 per cent has led to concerns in the retail, property and banking sectors that personal finances and debt will be squeezed.

“The fear is that growth activity seen in 2006 cannot be sustained. This has had an impact on business confidence in the finance and insurance sectors in the region, for example in Norwich, Ipswich and Peterborough.”

Although firms expect a tough economic outlook for 2007 when compared to 2006 they remain confident that both turnover and profits will rise. Turnover is predicted to rise from 5.9 per cent in the last twelve months to 7.5 per cent in the next year and profits to rise from 4.7 per cent last year to a predicted 6.2 per cent in the next twelve months.

Neil Laidler, VP of business services at Orange UK said: “Despite the low business confidence figure forecasts seem positive. Businesses in the East of England seem confident that with a predicted declining cost inflation and higher export growth, up 0.8 per cent to 4 per cent in the next year, they will deliver the growth in profits which will restore confidence.”

The BCM is one of the largest quarterly trackers of business confidence in the UK, based on the opinions of typically 1,000 finance professionals.