Confidence among CEOs and managing directors of British companies has hit a 22 year high, topping even the levels of confidence seen in the early 2000s before the financial crisis hit. According to business consultants BDO’s monthly optimism index, which collates results of surveys conducted by bodies such as the Bank of England, Markit and the Confederation of British Industry, business confidence reached a reading of 103.8 in January – an increase from the 103.4 reading taken in December and the highest reading since the index began in 1992.
As the index predicts industrial performance up to two quarters ahead, analysts believe this indicates that UK businesses will outperform long-term growth trends over the next six months. BDO partner Peter Hemingway believes the results will allow UK businesses to continue to grow without the worry of further economic downturn.
He says; “UK business confidence has hit record highs as we enter 2014 and we expect the economy to grow rapidly in the first half of the year.
“An interesting feature of the recovery so far has been the way in which UK productivity remains at levels last seen in late 2005.
“Looking at this optimistically, this means that the UK can continue to grow for some time by increasing productivity before wage-related inflationary pressures begin to kick in.”
The manufacturing sector, unsurprisingly, was the most optimistic of all industries surveyed, with hiring prospects and business expansion expected to improve yet further throughout the coming half. Following closely behind was the services sector which, although not as strong as the manufacturing sector, has performed well recently and remains the UK’s largest driver of growth.
It was a similar story when it came to regional results, with recent strong growth in the South West, South East and West Midlands triggering branch expansion and investment into recruitment for a number of firms. The slowest growth level was posted by firms in the East Midlands, but with a number of prominent manufacturing firms planning expansion throughout the region in the coming months it is hoped that this will have a positive impact upon local companies.
With further increases in business confidence levels predicted, this trend can only drive demand for business premises and provide a further boost to the commercial property market.
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