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Is recovery tougher than recession?

London, UK (08/09/2010)

LONDON (Management Today) 80% of businesses say they're having a harder time now than in the downturn. We're not surprised...

With all the ‘will it, won’t it’ tension surrounding our economic recovery, today’s business pages tend to read a bit like an EastEnders script. But it’s no surprise that those tasked with running businesses aren’t exactly enjoying the drama: in fact, a new survey has shown that for more than eight out of 10 business leaders, the uncertain business climate means conditions are tougher than they were during the recession – a damning indication of the state of business confidence at the moment. Looks like, come October’s spending review, the ‘doom and gloom’ Coalition will have its work cut out...

The report, by consultancy firm Berkshire, found that with shaky economic conditions, senior decision makers at 200 of the UK’s biggest companies are struggling to make accurate forecasts. Of them, 81% said they’re having problems making clear plans for the future, while 84% said not knowing what the economy is likely to do is making budgeting difficult. Another 65% added that they can’t predict how their businesses will perform over the next year.

All this seems to be creating something of a crisis of confidence: just 14% of those who took part in the survey said they feel they have the right skills to ‘match the conditions’, with only 46% expecting to hit targets, and nearly half saying they don’t anticipate achieving any growth at all this year. When some of the country’s most senior business leaders are questioning their own abilities, it may be time to worry.

No wonder they’re having a hard time: while talk of green shoots and recovery means there's an expectation of growth, businesses are also trying to keep their costs under control ahead of an austerity-induced spending slowdown. But with punters increasingly wary about putting their hands in their pockets, they're also having to fight harder to attract custom. It's a very difficult balance to strike.

While the onus is, naturally, on businesses to find ways out of the situation, the Government will need to take all this into consideration when it’s drawing up next month’s spending review. We may technically be in recovery now – but if business confidence sinks any lower, the delicate balance it has managed to achieve risks being shattered. We have a real cliffhanger on our hands…

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