UK Economy and Business Optimism Up
According to various studies, surveys and polls: The UK’s economy is getting better! Not only is the economy expected to grow by 2.5% this year and 2.1% next year, but business optimism is also at a 22-year high.
According to the National Institute of Economic and Social Research, or NIESR, the path of the UK’s economic recovery is unlikely to waver any time soon. The NIESR’s findings back up those from other financial forecasters, too. The International Monetary Fund (IMF) and the Organisation for Economic Cooperation and Development (OECD), as well as the UK’s Office for Budget Responsibility, have all become increasingly optimistic about the state of the UK’s economy.
The NIESR has also predicted that the UK’s unemployment rate will fall even further from the 7.1% that it currently stands at, to below 7% by the end of the year.
These predictions happen to come at the same time as BDO’s Monthly Trend Indices report, which is carried out by accountants and business advisors, compiling the results from various polls and surveys, “a poll of polls”. The report suggests that businesses in Britain have become much more optimistic about the probable future of their companies than they have for the past 22 years.
The BDO’s index has suggested that there will be even more improvements within the next six months, the next two quarters that it predicts the performance of. It stated that the business optimism also backs the suggestion of better employment rates, with hiring expectations of businesses at their highest in almost six years.
It is thought that consumers are being encouraged to spend more due to rising employment and house prices, which has fuelled the recovery and expected to carry on fuelling it through the next two years before inflation and higher interest rates catch up.
BDO partner Peter Hemington agrees, saying that productivity levels of the UK are the same as they were at the end of 2005, which means “the UK can continue to grow for some time by increasing productivity before wage-related inflationary pressures begin to kick in”.
In a separate study, KPMG LLP and the Recruitment and Employment Confederation has said that their measure of employment levels (with anything above 50 showing that companies are hiring) has dropped from 64.6 to 62.1 since December for permanent jobs, and slipping from a 15-year high of 63.1 to 62.8 for temporary work. This suggests that the people being hired are staying in work for longer.
Even some of the areas of the economy that were taking a little longer to turn around and start rebuilding again, such as construction, have done a u-turn and are showing signs of strengthening now. Overall, the economy looks to be getting better with everything on the rise apart from export trading. It may be a gradual change, but things are on the up, and will be for quite some time.