Confidence returns to global economy

The global recession may have levelled off with growth expected to return to the economy within 18 months according to the latest survey of international finance professionals. But public sector debt may yet stifle economic growth.

The Global Economic Conditions Survey, published by the Association of Chartered Certified Accountants (ACCA), reveals a decline in business confidence has come to a halt in regions such as Asia-Pacific and in some sectors, including small and medium-sized businesses.

In the UK over two thirds of finance professionals (69%) say the economic downturn has bottomed out – twice the number who thought so in Q1 this year.

Although confidence may have returned, the reality of trading is still very tough.

Accountants focusing on the public sector were particularly concerned by what impact necessary austerity measures introduced by governments would have on public sector spending.

This raises concerns of a double dip recession with the private sector having been hit hardest first, and the public sector suffering once economic stimulus packages are spent and government debt needs to be repaid.

When asked what they thought the economic landscape would look like post credit crunch, these were the top five features identified by respondents:

• stricter and more pervasive regulation, especially of financial institutions;
• tighter credit conditions;
• increased efficiency, as organisations look inward for cost savings and more efficient ways of doing business;
• stronger governance and internal business controls;
• consumers expected to become cautious net savers.

Commenting on the research, Dr Steve Priddy of ACCA said:

While there is little evidence of economic recovery, there is renewed confidence and optimism … given the growing debate about fiscal policy in the UK, it will be important to see some early evidence of whether the concerns of public sector finance professionals are justified.

[Picture credit: j / f / photos licenced from Flickr]