Business optimism at 22-year high

Optimism among UK businesses is at its highest level in 22 years, according to a survey from business consultants BDO.


The recovering economic conditions have driven more companies to consider their positions and a greater number are seeing a positive future.


The monthly report uses surveys from the Confederation of British Industry, the Bank of England’s Agents and data from Markit.


According to BDO, its optimism index predicts performance two quarters ahead and suggests that the next two months will see continued improvements.


It comes on the back of reports that suggest the economy will grow by 2.5% in the coming year, with the National Institute of Social and Economic Research saying the recovery is “entrenched”.


Other forecasters have also shown an improved level of optimism of late which will certainly boost many smaller businesses up and down the country.


Country-wide improvements


The threat of company administration on some of the hardest hit businesses is reduced, while the possibility of business rescue is also a lot more feasible.


Hiring expectations at businesses are up and this is helping to continually lower the unemployment rate – suggested to be at 7.1% according to the latest data.


Higher rates of inflation could bring about higher interest rates, but as yet the Bank of England is not taking action.


However, wages do remain low so there is still a long way to go before the levels seen a pre-financial crisis return.


“An interesting feature of the recovery so far has been the way in which UK productivity remains at levels last seen in late 2005,” explained Peter Hemington, a partner at BDO.


“Looking at this optimistically, this means that the UK can continue to grow for some time by increasing productivity before wage-related inflationary pressures begin to kick in.”


As a result, businesses are looking to take advantage and to ensure that the same mistakes will not be made again, should the economy fall into any trouble in the future.


By Phil Smith


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