Business optimism and company performance both slumped during the first
quarter of 2003, with British firms’ profits and order books also falling.
The findings are revealed in the latest Institute of Directors’ (IOD)
Business Opinion Survey, based on input from 500 leading company directors.
Employment and output growth were also considerably weaker with the fall-off
in business activity that started in the middle of 2002 accelerating rapidly.
According to the poll, the balance of companies that were more positive
about business prospects has crashed to minus 6 per cent, compared to 15 per
cent in December and 40 per cent 12 months ago.
The balance of companies performing well, minus those doing badly, was just
53 per cent -a fall of 7 per cent from December 2002 and 27 per cent from June
Ruth Lea, head of the policy unit at the IOD, said the figures were much
worse than expected with all the major indicators deteriorating. "The
survey was conducted during the early stages of the war with Iraq so it is
difficult to judge how this affected sentiment," she said.
"The results are so bad that they do not suggest a rapid return to
strong growth – there are simply too many negative managers."
Average pay settlements were around 3.2 per cent compared to 4.3 per cent in
December, while price pressures continued with directors complaining of
"The US economy is seriously unbalanced but will recover through sheer
drive. In the UK, however, the Government persists in hampering business with
more taxes and red tape," added Lea.