Last month, a quarterly growth of 0.3 per cent prevented the UK from slipping into triple dip recession. While this figure may seem so small as to be all but insignificant, it could prove to be the turning point that UK businesses have been waiting for – and could usher in a period of growth which could finally put Britain’s economic woes behind it for the foreseeable future.
Growth is important for many reasons, not all of which are directly concerned with the economic outlook itself. Business confidence relies heavily upon whether the market is going the right way, and so it is hardly surprising that the confidence of many SMEs has reached heights not seen since 2010.
Accountants trade body the Institute for Chartered Accountants in England and Wales (ICAEW) released the results of their quarterly Business Confidence Monitor in conjunction with business advisory firm Grant Thornton. As well as recording a high level of business confidence in the UK as a whole, it found that all sectors and all areas of the country had benefited from a boost – as opposed to any negativity in certain industries or locations being negated by rises in key areas such as the South East.
Yet even more good news followed this announcement as the partnership believes further growth will follow – although they warn against high hopes of huge boosts in quarterly totals. They have released a forecast growth of 0.6 per cent for the second quarter.
ICAEW chief executive Michael Izza believes that international economic incidents are the only real hindrance to UK growth.
He says; “There is a gradual improvement in the economy and the recovery is starting to stand on more solid ground.
“We should not be complacent though. There is still a degree of fragility and the economy is susceptible to knock-backs from events outside the UK.”
Unfortunately, some bad news accompanied the otherwise promising results, as the survey also discovered that there are few plans in the pipeline for growth in business investment. While this is not a huge concern at present, businesses wishing to focus on building up capital may find themselves falling behind competitors if the forecast growth encourages a boost in spending.
Furthermore, thanks to the ongoing issues in terms of consumer confidence, spending is unlikely to increase dramatically thanks to rising prices and a lack of wage increases limiting the amount of disposable income available to the average consumer. Until this issue can be resolved, significant growth in consumer-centric industries such as retail and leisure is bound to be somewhat constricted.
The survey will certainly raise the spirits of businesses weathering the rollercoaster the UK economy– however, there is still a long way to go before Britain can truly claim to be out of the woods completely.
Do you think an increase in business confidence will have a directly positive effect upon growth within the UK economy as a whole, or is the amount of growth achievable linked into consumer disposable income instead?
Previous Post
Has the Commercial Property Market Bottomed Out?
