UK economic confidence reaches new high

Surveys show that business confidence in the UK has reached a 13-month high, fuelling hopes that the economy has turned the corner.

Research carried out by accountants firm BDO showed that optimism over future trading performance is at its highest point since May 2012 and manufacturing output is at a 13-month high.

Separate data released last week which found that British manufacturing recorded its strongest growth in more than two years.

The improving outlook amongst companies in the services and manufacturing sectors will be given a further boost this week, with the International Monetary Fund expected to raise the UK growth forecast.

There is speculation that the IMF will lift its growth forecast for this year from 0.7% to as much as 1% tomorrow, despite claiming a few months ago that the British economy was too weak to withstand the Chancellor’s austerity plans.

Another report by Lloyds found regional business activity in June driving the strongest growth across the country as a whole since January 2012.   

Improved corporate and consumer confidence has also resulted in companies winning new business and increasing jobs in eight of the nine English regions last month.

The warmer weather and early summer sales prompted consumer spending to rise at its highest rate in 18 months in June, according to Barclaycard maintaining a 4.9% increase compared to the same period last year

However the ‘brightening economic picture’ of consumer confidence was not shared by all, in particular accountants BDO who claimed high street sales in June remained disappointing with growth at 0.7% compared to the same period in 2012.  They also noted that although there was strong growth in household goods, the fashion sector continued to struggle.

BDO’s Peter Hemmington said: “While it’s encouraging to see confidence continuing to improve, we should be mindful of the zigzag trend that has characterised UK business confidence since 2008. This time, the worry is that financial market turmoil arising from the actions of the Federal Reserve will choke off yet another nascent UK recovery.”

The manufacturers’ group EEF also sounded a warning by suggesting that signs of economic recovery would be “stifled, or at worst, snuffed out” unless industry gets improved access to finance. In a letter to Treasury officials, the body said the Government must “move rapidly to increase competition in banking”.

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