UK Business Confidence At Six-year High

02 Jul 2013

Business confidence in the UK is at its highest level since 2007, the latest economic survey from a leading business group has suggested.

The quarterly survey from the British Chambers of Commerce (BCC) is the latest indication that the UK's economic recovery is strengthening.

The BCC said export sales had grown by their fastest rate since it began publishing its survey in 1989.

It now expects GDP to grow by 0.6% in the second quarter of 2013.

That is significantly more positive than its previous forecast, where it predicted growth of 0.9% for the whole year.

"The UK upturn is slowly strengthening," said David Kern, the BCC's chief economist.

The survey adds to a slew of recent positive data suggesting the UK economy is beginning to strengthen after a long and slow recovery from the global financial crisis.

There was further good news from the Markit/CIPS purchasing managers' index (PMI) for construction which indicated the sector grew for the second month in a row in June.

'False dawns' warning

On Monday, PMI data also suggested UK manufacturing is growing at its fastest rate in two years, while Bank of England figures showed that mortgage approvals hit a three-and-a-half-year high in May.

Last week, official data showed the services sector, which accounts for about three-quarters of the economy, was continuing to grow.

Mr Kern said the services sector in particular was benefitting from rising exports.

"The remarkable export balances show that the service sector is capable of increasing its trade surplus over time and can work to reduce our overall trade deficit," he said.

"Developing the export potential of this sector is critical to long-term prosperity."

The BCC said the number of businesses looking to export had increased in the face of a flat domestic market, and exporters were increasingly looking to the rest of the world outside Europe.

However, there are still concerns that the recovery could yet be derailed.

Speaking on BBC Radio 4's Today programme, BCC director general John Longworth said there had been "false dawns" of recovery before, where business expansion had been choked off by banks being unwilling to lend the money required.

He also said inflation remained a worry among businesses.

But UK businessman Luke Johnson, the former chairman of Pizza Express, told the BBC he believed there was a "real recovery" under way.

"I think the consistency of all the surveys and statistics coming through over the last six to 12 months is pretty compelling," he said.

"I sense a rising tide of animal spirits. Of course there are always threats and challenges ahead [but] sentiment is now much better, and this is now a real recovery."

Source: http://www.bbc.co.uk/news/business-23141396