CONFIDENCE among British businesses is running at its highest level for a year, according to a survey published today.
More than half of business leaders think the UK has reached the bottom of its economic cycle, while 42 per cent are confident about prospects for their firms.
While only one in four executives believe their own prospects are poor, down from 37 per
cent in the spring, accountants at KPMG, which conducted the survey, warned that confidence was only rebounding from recent record lows.
Craig Anderson, head of KPMG in Scotland, said: "While it's encouraging there has been an increase in confidence, this is only an improvement compared to the spring, which revealed the lowest levels of optimism since our survey began in 2004."
One in three businesses admitted to experiencing financial difficulties, while the number facing higher financing costs has grown to 51 per cent, compared with 41 per cent last quarter.
More businesses are also experiencing tighter borrowing – 53 per cent, up slightly from 51 per cent in the spring.
Anderson said: "While, on the face of it, it may appear peculiar that, although many businesses are undoubtedly addressing serious financial problems, confidence levels have risen.
"I suspect that this reflects a view relative to where they were a few months ago as opposed to an opinion in absolute terms."
Executives remain gloomy about the wider economy: 54 per cent consider the UK economic outlook to be bad, while less than one in ten are bullish about economic prospects.
KMPG said that, while still negative, its findings are a "significant improvement" on the spring, when 81 per cent said the economic outlook was bad and a minuscule 3 per cent felt there was cause for optimism.
Some 49 per cent of respondents think the recession will last less than a year, compared with 14 per cent in the first quarter of the year.
Anderson said: "I think we are somewhere close to the bottom and that we may need to get used to this uncomfortable position.
"The jury is still out as to the likely shape of the recession and an L-shaped one – with a long period of relative stability but nothing constituting a recovery – cannot be ruled out."
