IT sector flush with confidence, says report

The latest report on business confidence from the UK's largest accountancy body, the Institute of Chartered Accountants in England and Wales, has indicated there was an unexpected resurgence in overall confidence as we entered 2006.

But the report, published on Thursday, has its caveats - its authors aren't willing to predict how long this will last, not least in the IT sector of the economy.

IT is one of the UK's most confident business sectors, according to this latest report, which gave the sector a confidence rating of 12.7.

To calculate its figures, the Institute asked 1,180 of its members whether they were more or less confident about the prospects facing their business over the next 12 months, compared to the last 12 months.

The IT industry's rating of 12.7 for the coming quarter compared with 9.3 in the last quarter of 2005 and 4.0 in the quarter before that. IT is one of the most confident sectors along with the banking, finance and insurance sector (16.4), and property and business services sector (13.9).

Overall, the report shows a dramatic turnaround in the UK economy, with the top-line Business Confidence Monitor rising from -6.8 to 4.4.

The survey also indicated UK companies will enjoy a small rise in revenue in 2006, up 6.3 per cent, compared to six per cent for 2005. This should lead to a boost in profits of 5.9 per cent, compared to 4.3 per cent in 2005.

However Eric Anstee, the Institute's chief executive, sounded a note of caution.

He said in a statement: "What we cannot tell from this survey is whether the turnaround is a temporary phenomenon, with a wider slowdown merely delayed, or whether it is a sign that the slowdown of 2005 is over and the economy is returning to more buoyant times."

The UK's smallest businesses - those employing fewer than 10 people - were the most optimistic, while the largest rise in confidence was seen in medium-sized businesses (50 to 250 employees) as they climbed 15.2 points to 8.0, the report said.

Colin Barker writes for ZDNet UK