Business wants tax cuts and lower interest rates, not stimulus spending

Sydney, 8 Decmber 2009 - A surprising 59 per cent of Australian businesses believe the government stimulus incentives made no difference to their businesses, with the majority believing that tax cuts (77 per cent) and lower interest rates (54 per cent) would be a better option.

The Atradius Economic Crisis Survey also found that more than a third (35 per cent) of those surveyed say the financial stability of their company will improve by the end of the year while 66 per cent of Aussie businesses predict the economic crisis will be over in 12 months.

This new global survey of 3538 respondents in 20 countries also found that only Canadians were more positive than Australians when it came to looking at their company's future financial health.

And the good news doesn't stop there. Australian businesses have good reason to be optimistic with only 18 per cent reporting a decrease in cash flow during the crisis as a result of access to finance, the lowest rate of any country surveyed. This compares to a staggering 55 per cent of Spanish businesses whose cash flow was affected when finance became harder to access.

David Huey, Managing Director of Atradius, Australia and New Zealand said, "It's interesting that despite an optimistic future, almost half (47 per cent) of the Australian businesses surveyed deemed that the government's stimulus efforts were ineffective.

"While the stimulus package provided the economy with an immediate cash injection and one off tax breaks, time will tell if the incentives will have long-term lasting benefits on a company's cash flow."

The global survey revealed that companies throughout the world are strongly divided in their opinions about the steps their governments have taken to stimulate the local economy. Overall, Chinese companies were the most positive, while Irish, Spanish and Mexican companies are the most critical.

"This survey highlights that while Australian businesses are emerging relatively unscathed from the global financial crisis, there is a long way to go for some economies, which is worth keeping in mind when conducting business overseas and exploring potential new markets," added Mr Huey.

In fact, 54 per cent of Australian respondents say they increased their pursuit of new markets or sales channels during the economic crisis. However businesses are proceeding with caution with 42 per cent increasing credit checks of their buyers and 41 per cent changing the credit terms.

"There is still a strong insolvency risk for Australian businesses and it is increasingly important that companies protect themselves against bad debt and manage some of the financial risks inherent in world trade," said Mr Huey.

Other key findings of the survey include:

Australian companies report small changes in staffing levels

44 per cent of Australian companies reported no change in their staffing levels during the economic crisis. Meanwhile 31per cent reported a decrease, compared to a staggering 64 per cent of Irish companies surveyed.

China and Poland most optimistic, Spain, Ireland and Belgium most pessimistic

China and Poland are the most optimistic of recovery, with 26 per cent of respondents anticipating an end to the economic crisis by year end 2009, compared to 32 per cent of Australian businesses; Ireland and Spain and Belgium are the most pessimistic, with more than 50 per cent of respondents believing that the economic crisis will not end before 2011.

Increase in focus on customer service in an effort to retain customers

47 per cent of respondents in the countries surveyed increased their focus on customer service as a result of the economic crisis; China and Ireland had the biggest increases with 69 per cent and 68 per cent respectively, while 17 per cent of Hong Kong businesses decreased their focus on customer service.

About the Atradius Economic Crisis Survey

To get an indication of the current impact of the global economic crisis on businesses across the world, businesses in 20 countries around the world were asked about their impressions of the effect of the global economic crisis and their views on its current impact. 3,538 interviews were conducted in August 2009, with 168 Australian companies participating.

View the full Atradius Economic Crisis Survey report or the Core Results - Australia report.

About Atradius

The Atradius Group provides trade credit insurance, surety and collections services worldwide, and has a presence in 42 countries. Its products and services aim to reduce its customers' exposure to buyers who fail to pay for the products and services they buy. With total revenues of more than EUR 1.8 billion and a 31% share of the global trade credit insurance market, its products help protect companies throughout the world from payment risks associated with selling products and services on credit. With 160 offices, it has access to credit information on 52 million companies worldwide and makes more than 22,000 trade credit limit decisions daily.

For further information please contact
Denise Hung
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