Channel firms boosted by optimistic UK market

Bank of England: Interest rates cuts have restored confidence in UK businesses

The UK channel was given a double shot in the arm last week as a report claimed that confidence among UK businesses remains healthy and industry bellwether Cisco posted upbeat results.

The UK and Euro Area Business Trends Report from market research and accountancy firm BDO Stoy Hayward, revealed a stark contrast between business confidence in the UK and mainland Europe.

BDO’s Optimism Index for UK businesses has declined slightly from 101 points in January to 100.9 points in April, but remains above the neutral mark of 100, which points towards growth in the medium term.

However, in the European region the Optimism Index plummeted from 99.1 points to 97.9 in the first four months of the year.

Peter Hemington, partner at BDO, said: “In its bid to tackle inflation, the European Central Bank has had little room to manoeuvre and has not been able to assist the markets with rate cuts. However, the Bank of England has been able to take a more expansionist approach.”

Peter Critchley, marketing director for integrator Morse, said of the recent interest rate cuts in the UK: “All these measures help with confidence. The IT market is looking reasonably solid, but we have to keep watching it. The impact of a cautious market comes through over time.”

The channel also breathed a sigh of relief as industry giant Cisco beat profit expectations for its fiscal third quarter to 26 April. Turnover for the quarter rose 10.4 per cent to $9.8bn (£5bn), ahead of its previous forecast of 10 per cent growth.

Adam Harris, managing director of reseller Bear IT, said: “The financial sector seems to be holding its cards close to its chest, but for everybody else it seems to be business as usual. While there may be cuts in spending, they are definitely not in this industry.”