There was more good news for the UK economy today as consulting and accountancy firm BDO published research showing business optimism is on course to hit its highest point for 22 years.
The BDO Optimism Index, a forward-looking measure which forecasts business sentiment six months in the future, has seen the highest reading in its 22-year history, reflecting a wider positive mood as the UK emerges from the financial crisis. The Index reached the all-time high of 103.8 in January, up from 103.4 in December and 103.1 in November.
BDO’s Peter Hemington said:
“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. Companies are raising headcounts in response to rising client demand and the data suggests that the unemployment rate is likely to fall below the Bank of England’s 7% threshold for considering raising interest rates in the very near future.
“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.”
This latest cheery economic forecast comes hot on the heels of a string of similar news – just last week job vacancies in the UK hit a 15-year high, and the ICAEW predicted the UK’s economy will grow 2.5% in 2014. Last week also brought good news for the contracting industry, with a new report showing a third of specialist contractors plan to expand in the next twelve months.