Confidence picks up in Britain: Prospects 'extremely encouraging', directors' report says

BUSINESS and consumer confidence is rising on both sides of the Atlantic, lifted by improved economic prospects in the next six months, two surveys suggested yesterday.

In Britain, the Institute of Directors said that business confidence had improved slowly over the past two months but that prospects for the new year had become extremely encouraging.

The IOD's latest survey of company optimism shows that confidence has recovered from a recent low but has yet to regain the latest high point set in August.

The number of directors more confident over the economy has risen 5 percentage points, to 47 per cent, since October.

'At the end of 1993 the picture is one of cautious but slowly increasing optimism about the economic and business prospects for next year,' Peter Morgan, the director- general of the IOD, said.

'With low inflation and interest rates, falling unemployment and the recent Gatt agreement, the prospects for 1994 look extremely encouraging.'

The survey suggested that company directors were for the moment unconcerned about the impact of Budget tax increases on consumer spending. Optimism over individual company fortunes and employment rose after the Budget.

The IOD poll showed that directors viewed maintaining and stimulating demand as the main business challenge. Worries over cash flow have subsided.

Sales volumes, orders and profits continue on an upward trend, the IOD said.

In the US, the Conference Board said consumer confidence rose sharply in December, reflecting a marked improvement in optimism for the coming six months. The board's confidence index rose sharply to 80.2 in December from 71.9 in the previous month.

The US Commerce Department forecast that business investment in capital equipment and consumer purchases of durable goods will next year result in the fastest growth in sales of manufactured goods since 1988.