BDO positive on economic prospects

BUSINESS CONFIDENCE has increased for the tenth consecutive month amid signs the economic recovery will gather pace in the first half of 2014, according to research from BDO.

BDO’s Optimism Index, which predicts business performance two quarters ahead, increased from 101.7 in October to a 43-month high of 103.1 in November, taking it above the 100.0 mark that indicates the UK economy’s long-run average growth rate.

Optimism in the services sector, which accounts for just over three-quarters of the UK economy, rose to 100.4 in November, up from 99.9 the previous month. Optimism among manufacturers, driven by rapid growth in new business orders, rose from 109.6 in October to 115.3 this month – the sub-index’s second highest reading in Business Trends’ 21-year history.

Peter Hemington, partner, BDO, commented: “This is a strong and broad-based recovery. I think we can finally say that the key economic battleground has shifted from austerity to the new debate about how the UK government can help UK businesses achieve sustained growth in the context of a dynamic, internationally competitive economy.

“The UK clearly has some substantial long-term problems in terms of an underperforming education system and a dysfunctional planning regime. Only time will tell whether the coalition government’s radical plans for educational reform will work, but at least there is plenty of energy behind implementing these. Planning seems to have been filed in the “too difficult” box by successive governments, so real change is unlikely anytime soon.”