Smaller UK business cutting investments on uncertain domestic demand

In the UK while leading corporates have sounded optimistic about trading prospects over five years, smaller companies have put investment plans on hold and are raising prices in the face of domestic demand uncertainty.

The divergent perceptions of prospects are due to the exposure to export and domestic markets as the economy entered what would likely turn out to be a quarter of slower growth

In what is said to be the most positive result since 2006, 60 per cent of corporate leaders polled in an Ipsos MORI annual captains of industry survey are bullish on their company's prospects in the next year with only 7 per cent expecting things to get worse. Ipsos MORI is a part of the Ipsos Group and is a leading UK research company.

However, a survey by Lloyds TSB Commerical, which polled 1,800 mostly medium-sized companies showed business confidence falling for the first time in 18 months, with more companies saying they feared a fall in sales and profits. A double dip is not forecast in either of the reports, though.

According to Stephen Pegge, head of external affairs at Lloyds TSB Commercial, the trends indicated a slowdown in growth rather than a return to recession. Lloyds TSB Commercial is part of Lloyds Banking Group.

The Ipsos MORI survey shows strong support for the coalition's economic strategy, with 89 per cent saying its policies will improve the state of the economy. Three-quarters say the budget deficit needs to be cut quickly.