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ICAEW expects immediate exit from recession in Q2
General News |
16/05/2012
A rise in business confidence over the last three months suggests the UK is likely to exit recession in the near future, it has been claimed.
According to the Institute of Chartered Accountants in England and Wales (ICAEW) and Grant Thornton's Business Confidence Monitor (BCM), levels of optimism are rising in business.
The firms believe the UK’s economy will continue to ‘zig-zag’ over the next 12 months, with economic recovery still very fragile.
But a rise on the BCM confidence index from -9.3 in Q1 2012 to +12.0 suggests the economy is now heading in the right direction.
This reading is the highest recorded since the second quarter of 2011.
"This strong improvement in confidence suggests the current recession is likely to be short-lived, with quarter-on-quarter growth of 0.6 per cent forecast for the second quarter of 2012," ICAEW stated.
Companies report that exports are 4.1 per cent higher than a year ago, up from 3.3 per cent last quarter and the strongest growth since Q3 2011.
Grant Thornton chief executive Scott Barnes said any improvement in the key performance indicators in the BCM is positive.
"Turnover and profits are all increasing but nowhere near the rate seen pre-recession and businesses are beginning to realise that this environment may be the norm for some time," he stated.
"However, we are working with dynamic companies that are delivering high growth in both domestic and global markets, so businesses must continue to look for opportunities."
Michael Izza, chief executive of ICAEW, said the government needs to harness businesses’ increasing optimism about the UK’s economic future and turn it into "sustainable, consistent growth".
"To squander it could consign the UK economy to stagnation for the immediate future."
Posted by Jon Aspinell
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