BUSINESSES are worried about the island’s economic prospects. The latest business trends study shows increased optimism among local companies about their future but a marked drop in confidence for the island economy.

The annual Young Business Group survey showed that three-quarters of businesses said they performed as well or better last year than the one before.

But there has been a slide in confidence about the island’s economic prospects. Since the 2001 survey, the number of people saying they are less confident about the next 12 months has risen by 26%, from 16% to 42%.

‘I am concerned if there is a lack of confidence, but I think it is fleeting,’ said Commerce and Employment minister Stuart Falla.

‘If there is a lack of confidence, we in the department must do our best to bolster it because we are very keen to help local industry.’

‘The figures appear to show that island businesses remain generally confident about their own prospects, but there are real worries about Guernsey’s economic prospects for the next 12 months,’ said YBG president Matt Polson.

Deputy Falla believes business confidence is already improving as the new government beds in.

‘I think much of the uncertainty stemmed from the fact that when the survey was carried out there was uncertainty of how the general election and the new States would operate,’ he said.

‘But of course, since then the Policy Council has announced how the States is set to treat the taxation of savings income and this has provided more stability and taken away a level of uncertainty.’

Chamber of Commerce president Mark Gill said that continued loss of confidence could lead to less investment in the island.

‘I think concerns are clearly going to be what happens when there is zero taxation in 2008 and what the States will put in place to compensate,’ he said.

‘Of course, there is also uncertainty over other measures that could be put upon us like more regulation and bureaucracy in the finance sector.

‘At the moment there is uncertainty because it seems to be all change.’

Deputy Falla said that he now expected confidence to rise.

‘I know myself, as a businessman, that when I was filling out the survey there was a level of uncertainty and therefore less confidence, but I expect that confidence to grow again.’

Mr Polson said that the survey showed businesses remained confident about matters they could influence but concerned about outside factors that might impact on the island’s prosperity.

Deputy Falla accepted that.

‘I think it a natural position that business people are more comfortable with internal challenges they can affect but are less comfortable with things they cannot influence. But that has always been a challenge in business and from that perspective, is not unusual.

‘There was uncertainty over the change in government here, but there remains uncertainty over the UK relationship with the EU, in terms of the constitution and the euro and the associated impact on Guernsey.’