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Business confidence slides, as economic uncertainty rises

Ongoing economic uncertainty caused business confidence to fall nearly ten points in February, to 108.9, after six consecutive months of rises to January 2012.

The findings from the Roy Morgan Monthly Business Confidence Survey show there has been a 57 percent decrease in businesses who consider that ‘Australia will have good economic conditions in the next 12 months’.

According to Roy Morgan industry communications director Norman Morris, although business confidence for all states and industries remains positive overall, major differences exist between them.

“Australian businesses are not seeing their outlook as the much quoted ‘two-speed economy’ but rather are ‘multi-speed’ in their confidence,” he said.

This poor economic outlook is impacting negatively on investment levels, with 51 percent of businesses now considering the next 12 months as a  ‘bad time to invest in growing the business’.

“Business size also seems to be a major contributor to confidence,” Morris said, adding that medium and large businesses are ranking higher in confidence than are micro businesses.

“As micro businesses account for around 90 percent of businesses in Australia, any assistance such as tax relief or drop in interest rates would have a major overall impact on business sentiment,” he said.