Economic confidence plummets

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In a survey of 600 UK firms by accountants Grant Thornton, a balance of 14% were more optimistic about this year - far below the 43% at the same time last year.

The latest figure, the difference between the percentage of businesses feeling better about the coming year and those feeling worse, is the lowest since 2006's balance of plus 8%.

UK optimism was also lower than the 22% positive balance recorded in the US - the home of the sub-prime credit crisis - which rose 8% on the year.

Alysoun Stewart, head of Grant Thornton's strategic services group, said that if American bosses had reason to be cheerful, then the UK's should too.

She said: "The US is currently experiencing a greater fallout from the credit crunch than the UK, yet businesses there are more confident about the year ahead than we are. If the US can be positive about withstanding the effects of the credit crunch, then so can we."

Reasons given for the increased UK gloom included global economic uncertainty, fears over falling consumer spending, and the lack of skilled workers. The EU average was also more than twice the UK's at plus 35%.

Ms Stewart added: "While no-one is suggesting that 2008 is going to be a walk in the park, businesses still need to be cautious that they don't end up talking the country into a recession. We need to cast aside our negative attitudes and focus on solutions rather than the problems."

Despite falling UK confidence, expectations for turnover and selling prices were more optimistic at plus 68% and 42% respectively, up from 64% and 35% in 2007.

Anticipation about employment levels was also more positive, at plus 36%, up from 33%. But hopes for better profits were slightly down, with a balance of plus 54% compared with 57% in 2007.