Global economic recovery is slipping away say accountants
The global economic recovery, which has been slowing down in the past few months, has now gone into reverse, according to a worldwide survey of finance professionals by ACCA (the Association of Chartered Certified Accountants).
The results of ACCA's Global Economic Conditions Survey for the fourth quarter of 2010 show that twice the number of accountants as compared with the previous quarter (28 per cent as opposed to 14 per cent) believe that the recovery is slipping away.
Faith in the recovery is also at its lowest level in 18 months, with less than a third of respondents (32 per cent) believing that conditions are improving - or are about to. In the previous quarter, nearly half (47 per cent) were optimistic about economic prospects.
As a result, business confidence, as recorded by the survey of more than 600 professional accountants from around the world, has now gone into negative territory for the first time since the third quarter of 2009, with the share of respondents reporting no change in their confidence levels (37 per cent, down from 42 per cent in Q3, 2010) falling below that of respondents who had lost confidence in their organisations (38 per cent, up from 28 per cent).
Manos Schizas, ACCA senior policy adviser, said: “The issue for finance professionals for some time now has been the question of whether the economy, which had been showing signs of recovery, had taken a pause for breath or was about to take a downturn. The findings of this survey suggest that finance professionals think the downturn is now the more likely scenario.”
While the small and medium-sized enterprise (SME) sector appears to be the most resilient, followed by the private, non-financial sector, there has been a significant drop in confidence in accountants working in large financial services companies.
This may be as a response to developments such as the economic crises in some European countries. Finally, as had been feared, confidence levels among public sector accountants are lower than were seen during the depths of the downturn, and the loss of confidence in this sector continues to accelerate.
The survey has also shown that accountants see governments as being powerless to prevent a new downturn. As a result, assessments of government policy have decoupled from economic conditions and remained relatively positive. While 38 per cent of respondents (up from 33 per cent) rated their governments' responses to current economic conditions as “poor” or “very poor”, a relatively stable 26 per cent (down from 27 per cent) rated them as “good” or “very good”.
The survey shows that late payment is on the increase, as is the number of insolvencies. The outlook for investment has also deteriorated, with businesses putting off decisions until the economic outlook becomes clearer. Only 8 per cent of respondents reported a rise in investment of any kind (down from 14 per cent), but the share of respondents reporting a scaling down of investment in staff and capital also fell marginally (from 38 per cent to 37 per cent).
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NOTES TO EDITORS
ACCA (the Association of Chartered Certified Accountants) is the global body for professional accountants. We aim to offer business-relevant, first-choice qualifications to people of application, ability and ambition around the world who seek a rewarding career in accountancy, finance and management.
We support our 140,000 members and 404,000 students in 170 countries, helping them to develop successful careers in accounting and business, with the skills required by employers. We work through a network of over 80 offices and centres and more than 8,000 Approved Employers worldwide, who provide high standards of employee learning and development. Through our public-interest remit, we promote appropriate regulation of accounting and conduct relevant research to ensure accountancy continues to grow in reputation and influence.
Founded in 1904, ACCA has consistently held unique core values: opportunity, diversity, innovation, integrity and accountability. We believe that accountants bring value to economies in all stages of development and seek to develop capacity in the profession and encourage the adoption of global standards. Our values are aligned to the needs of employers in all sectors and we ensure that, through our qualifications, we prepare accountants for business. We seek to open up the profession to people of all backgrounds and remove artificial barriers, innovating our qualifications and delivery to meet the diverse needs of trainee professionals and their employers.
For further information, please contact:
Colin Davis, ACCA Newsroom
+44 (0)20 7059 5738