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Recession Has Bottomed Out, Say Business Leaders

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http://www.guardian.co.uk/business/2009/ju...nce-survey-kpmg

The mood among UK business leaders has hit its highest level for a year, with a small majority believing that the bottom of the business cycle has been reached.

According to the latest quarterly business confidence survey from consultants KPMG, confidence has lifted from the rock bottom it hit this spring despite an increasing number of firms facing financial difficulty. The proportion of senior executives questioned by Opinion Leader Research who think their business prospects are good has almost doubled to 42% from 22% in the first quarter of the year. And 55% now believe the economy is at the bottom of the cycle.

But business executives are far gloomier about the wider economy, with 54% saying the outlook is still bad while only 9% are ­bullish about the prospects.

"While it's encouraging that 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," said Malcolm Edge, head of markets for KPMG in the UK.

"I think we are somewhere close to the bottom and 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."

He said the problems of weak demand, spare capacity, pressure on profit margins and funding problems would not quickly disappear.

One in three firms admitted to experiencing financial difficulties, the number facing higher financing costs rose to 51% from 41% a quarter ago and the share of businesses experiencing tighter borrowing has risen to 53% from 51% in the spring.

Edge added: "Given the increase in concerns relating to financing, it is perhaps no surprise that our survey found nearly one in four businesses have seen their banking relationship worsen."

Don't think we've had a green shoot article today.

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The trouble with looking for a "recovery" is the implication that 2002-07 was "normal" and 2009 is somehow "subnormal"

Rather than looking at it as an "L shaped recession" perhaps they should just consider that the much of the last 10 years was GDP growth built on sand, and what we have in fact seen is an ^ shaped boom which is now returning to a more sustainable long term norm.

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