The economic recovery in the UK ran out of steam in the third quarter of 2015, while the rest of Europe enjoyed a period of calm.
The Global Economic Conditions Survey carried out jointly by ACCA (The Association of Chartered Certified Accountants) and IMA (the Institute of Management Accountants) showed that while real income was growing – along with consumer confidence – businesses in the UK are concerned, with confidence dipping to its lowest since the last quarter of 2012.
At the same time, business confidence in Western Europe held up much better than in other regions. The bailout agreement reached with Greece to keep it in the euro-zone is likely to have helped, but even in Q2 businesses did not appear overly concerned about the risks posed by a potential “Grexit”.
More importantly, the euro-zone economy looks to have performed relatively well in the third quarter. The export sector has been given a boost by the weakness of the euro; household spending has been lifted by the fall in global commodity prices, while the ECB’s quantitative easing programme continued to drive a recovery in bank lending.
However, data is showing signs of a slowdown. Industrial production shrank by 0.5 per cent in the euro-zone in August. Globally economic confidence is at its lowest point around the world for four years after a sharp drop in business sentiment in the third quarter of 2015, according to the survey of finance professionals.
Results show that, globally, finance professionals were more gloomy than at any time since 2011.
The survey, the largest regular survey of accountants around the world, which attracted 950 responses, showed that the emerging markets of the Asia Pacific region, in particular, have suffered the deepest slump. This follows concerns about the Chinese economy on which so many of them rely, along with a fresh fall in global commodity prices. More firms in the region are putting a freeze on recruitment and investment in staff is falling.
The world’s other economic giant - the US- continues to cast a long shadow.
While the strength of the US dollar was undermining the competitiveness of US exporters, the decision to push back the start of its tightening cycle, possibly to next year, has given some respite to emerging market currencies at the start of the fourth quarter.
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