UK business confidence has hit its highest level since the autumn of 2010, according to a recent report, which also estimated an expected growth of 0.6% to Britain’s economy during the second quarter of 2013.
The UK Business Confidence Monitor, which is released quarterly by Grant Thornton and the Institute of Chartered Accountants in England and Wales (ICAEW), has indicated that the rise in business confidence provides “further evidence that the economy is strengthening”. The confidence index rose from +12.8 in the first quarter of this year to its current level of +16.7, having increased now for three consecutive quarters. The survey found this increase to be consistent across all sectors and throughout all regions of the UK, with particularly encouraging figures emerging from the construction industry.
The report concluded that input price inflation is set to slow over the coming twelve months, while businesses can expect stronger export performance in the year ahead, despite slow growth in global trade volumes. British exporters have already been benefiting from the weaker pound.
ICAEW’s Chief Executive, Michael Izza, has indicated that economic recovery is “starting to stand on more solid ground,” while reminding that the economy remains susceptible to the effects of events outside of the UK.
According to the survey, average pay should increase by an estimated 1.5% over the coming twelve months, which comes as good news after the past year’s increase of only 0.9%, which kept consumer spending under pressure.
Furthermore, the British government’s Insolvency Service has released news of a decline in corporate insolvencies, which “further strengthens the economic outlook,” according to Clive Lewis, ICAEW Head of Enterprise. Figures revealed a 15.8% drop in British company liquidations over the past year, while personal insolvencies dropped to their lowest level since 2008 across England and Wales in the first quarter of 2013.
The news suggests that measures taken by the Coalition Government may very well be working. An IMF delegation is scheduled to arrive in the UK this week to meet with members of the Treasury, the Bank of England and the Office for Budget Responsibility. The IMF, whose chief executive has advised UK Chancellor George Osborne to “consider slowing the pace” of austerity measures, is expected to set out policy recommendations for economic growth during the two-week visit.