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Recession's end has signalled a boost in trade for businesses.

Byline: Sin Barry

NEARLY a half of businesses in Wales have noticed an improvement in their trading positions since confirmation that the UK economy has emerged out of recession.

The latest bimonthly Business Watch Survey from Deloitte and the Western shows 44% of respondents reporting a modest upturn in business since the GDP figures reported positive growth, -officially ending the UK's longest recession. However, 25% still reported a modest decline since.

In Q4 of 2009 the UK came out of recession with an initial growth figure from the ONS of 0.1%, which was revised further upwards last week to 0.3% However, three quarters of businesses (78%) say they have noticed no improvement in the overall economic situation since the announcement, while 22% said they had noticed a modest improvement and none had seen a significant improvement.

The survey found that Welsh businesses had a sceptical view on the availability of capital. Nearly three quarters of Welsh businesses (72%) have seen no difference in the availability of capital in the last month and the same number expects to see no change over the next three months. Over the next six months, the outlook begins to improve with just 44% anticipating no change in the availability of capital and 33% anticipating a modest improvement.

More than half of businesses (56%) expect the availability of finance to improve but are downbeat about the conditions. Two thirds of businesses (67%) expect the cost of existing finance to deteriorate, rising to 80% who expect the cost of new finance to deteriorate. Almost two thirds of organisations (63%) anticipate deterioration in lending conditions with only 56% expecting availability of finance to improve. The view was equally split as to whether credit lines were expected to expand or reduce.

John Antoniazzi, partner at Deloitte in Wales, said: "Organisations in Wales were holding out for the news that the country was officially out of a recession. However, this does not mean that there has been a total resurgence from the recession and some businesses have been disappointed by this. Unfortunately there is no quick fix for the economy and while we could momentarily celebrate the announcement, we had to promptly move our attention back to preserving and growing businesses and the economy as a whole.

"The last two years have been an extremely difficult period for businesses in Wales and for some it pushed them too far. It is entirely understandable that the survey shows businesses are adopting a guarded approach to the next few months. They are not only uncertain about what the future holds but also wary of raising their hopes too quickly.

"Businesses in Wales are reliant on the state of the economy and the position of lending institutions.

They need to see an increase in the availability of capital and an improvement in lending conditions to make sure that the foundations for a growing economy are firm."

The outlook for the future is still mixed with a split between expectations for employment, training and capital investment. 39% of Welsh businesses anticipate making no change in employment, 33% believe they will recruit and 29% anticipate that their employment level will decrease. Meanwhile, 44% plan to make no change to their investment in training, 28% will increase investment and 28% will decrease investment.

Half the respondents anticipate no change in capital investment (50%) with 28% anticipating an increase and 22% anticipating a decrease.

More positively, nearly two thirds of respondents (61%) anticipate output levels increasing with only 17% anticipating levels to decrease. Nearly half anticipate an increase in mergers and acquisitions (47%) with 18% decrease and 35% no change.

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POSITIVE OUTLOOK: John Antoniazzi, partner at Deloitte in Wales
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Title Annotation:Business
Publication:Western Mail (Cardiff, Wales)
Date:Mar 4, 2010
Words:616
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