3i survey says European business confidence has plummeted in the last three months

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Confidence among venture-backed companies fell at the sharpest rate for five years in the latest quarter, according to the latest 3i European barometer.

The index, which records the views of private companies on the business and political climate, has fallen in four of the five countries measured, and the overall result is now minus 69 compared to minus 39 three months ago.

The survey was conducted in July 2002, at the height of public market uncertainty, and reflects a more cautious short-term expectation for turnover and profitability than three months previously, when confidence was at its highest since February 2001.

The most negative country is Germany, where business confidence is at a record low, whereas in France confidence levels rose slightly. In the UK 3i found that non-manufacturers were more negative about the future than manufacturers for the first time in seven years.

The findings reflect a general pattern of caution and pessimism in the business world. The unpredictability of public markets and low rates of economic growth recorded in countries including the US are part of the problem, although 3i’s survey does show that a majority of venture-backed companies do expect to be employing more people by the end of 2002 than they were at the end of 2001.

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