UK Businesses Brighten Economic Prospects
The latest business surveys suggest that things are looking up for most UK businesses. Forecast growth from the CBI business lobby group is only 1% but this is a move from “flat to growth” which is a slight improvement.
In particular the services sector has renewed confidence, although manufacturing companies are not so hopeful. Instability in the Eurozone as well as economic challenges are not encouraging conditions for investment and businesses have been suffering as a result.
Inflation is certainly a contributing factor to this, peaking at 3.1% this quarter and affecting consumer living standards.
This increase in confidence is voiced by John Cridland, director-general of CBI who said, “Amongst CBI companies, there’s a general sense that the forward mood has brightened a little.”
The government’s Funding for Lending Scheme seems to be working and small to medium businesses are feeling that support in credit costs and availability.
Rising prices of energy and commodities that have hit consumers have also affected the manufacturing sector. Peter Hemington, a partner at BDO, said “the government could do more to help UK manufacturing, particularly by encouraging both lending and investment in the sector”. Offering support to the flagging manufacturing sector could be a key factor in rebalancing the UK’s economy.
A BDO survey which observes optimism in business performance has found an Optimism Index of 93.0 in the current climate. This has increased in recent months although the scale determines that growth is not indicated until a score of 95 is reached on the index.
Overall UK businesses seem to be heading in the right direction and resurgence in the services and other sectors will undoubtedly have a positive impact on manufacturing, reasserting the UK economy to its full strength.
