As we all know by now Business Confidence is a key determinant of Investment spending.
If Business Confidence falls, then Investment will likely fall and as this is a component of aggregate demand we can expect a fall in real GDP, or at least a slowing of economic growth.
The latest data suggests that Business Confidence is declining as there is greater uncertainty following the Federal Budget.
Note this fall in confidence is largely to do with uncertainty. It's not that the business community disliked all the Budget measures, rather they are unsure if those measures will get through the Senate. Predictably firms are also worried that the Carbon Tax will not be repealed as its abolition represents a boost to company profits.
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