By Daniel Hunter
The UK looks set to avoid a triple-dip recession according to the latest ICAEW/Grant Thornton UK Business Confidence Monitor (BCM). Business confidence is at its highest since Q2 2011 and suggests that growth will resume this quarter.
"There was a risk that, combined with the traditional January blues, the bad weather and some high profile retail collapses, talk of a triple dip recession could become self-fulfilling," Michael Izza, chief executive of ICAEW, said.
"These results show that we are set to avoid a third period of technical recession, but no one should be complacent. There is only one way out of our economic malaise, and that’s to increase our economic output. Such a task isn’t going to be easy, or indeed quick."
Grant Thornton UK LLP CEO, Scott Barnes said: "Export growth rose slightly this quarter as the global economy picked up. This could be a sign that the export-led recovery we need may be beginning.
"This is coupled with an improvement in both profit and turnover growth, which companies expect to increase in the year ahead. Despite a rise in confidence though, companies’ modest plans for capital investment are a worry as this is crucial to a strong and sustained recovery."
There is continuing good news for the labour market as private sector recruitment increases as do hiring expectations for the next 12 months. Firms have seen a 1% increase in staff in the last year and plan to increase headcount by 1.5% over the next 12 months. One in 10 firms say the availability of management skills is a greater challenge than a year ago, suggesting that companies may struggle to recruit the right people to lead the recovery.
Companies reported an increase in turnover of 3.3% in the past 12 months, and expect a rise of 4.6% in the year ahead. Similarly profits grew by 2.5% in the past 12 months and are expected to grow by 3.9% in 2013. Although below the pre-crisis averages(of 6.5% reported turnover growth and 5.3% reported profit growth), expectations are more optimistic than they have been in recent quarters.
Confidence is positive across all regions with the South East and Wales among the most optimistic. Businesses in all sectors also reported a positive trend with IT & Communications and Construction recording the highest Confidence Indexes.
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