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BUSINESS CONFIDENCE IS ON THE UP
Posted on 16th Feb 2012 in News
An upturn in business confidence points to an improvement in the UK economy from mid-2012, according to the latest Business Trends report by accountancy and business advisory firm BDO LLP.
BDO’s Optimism Index forecasts business confidence two quarters ahead, so looks beyond the immediate downturn expected following contraction in Q4 2011. The Index rose from 91.5 in December to 94.1 in January, the largest monthly rise for nearly a year, although it has yet to reach the 95.0 mark, which indicates growth. However, the figures do give rise to hope of a recovery in the second half of the year, particularly as they are not confined to one sector. The Optimism Index for services increased from 92.8 in December to 94.7 in January, whilst manufacturing jumped from 86.6 in December to 91.3 in January.
Inflation is also expected to fall, with BDO’s Inflation Index dropping from 106.3 in December to 105.2 in January. This trend is likely to continue throughout 2012, with inflation expected to fall back to 2.8% by March and reaching the Bank of England’s 2.0% target by the end of the year.
However, the Output Index, which measures turnover expectations three months ahead, paints a gloomier picture in the short-term; it fell for the eighth consecutive month, from 91.4 in December to 91.2 in January. The figures point to a contraction in Q1 2012 which would place the UK in technical recession, although of less severity than in 2008 and 2009.
Peter Hemington, Partner, BDO LLP, commented: “Undoubtedly, prospects for growth continue to be fragile – as the UK has already very likely entered a technical recession and the situation in the Eurozone remains difficult to predict. However, the marked increase in business confidence is an encouraging sign pointing to better times ahead. It is particularly reassuring to see a broad based boost in optimism across key sectors such as manufacturing and the all-important services sector. We welcome the Bank of England’s £50 billion quantitative easing injection which will provide much needed impetus for growth - the economy looks to be on a firmer footing in the second half of 2012.”
Invoice finance is the perfect funding vehicle for growing businesses, as, unlike overdrafts, it grows with them. So, whenever the time is right for you to take the next exciting step, talk to SME Invoice Finance and find out what invoice finance can do for you.
