Confidence appears to be booming among UK firms, with businesses planning to increase investment budgets over the next year.
Some economists have feared the recovery is overly reliant on consumption and borrowing, rather than more sustainable business investment.
Yet optimism this summer has hit its highest level in more than a decade, according to professional services firm BDO. Its optimism index stands at 105 – firmly above the 100-level which represents long-term growth. BDO’s output and employment indices also showed healthy growth at 103.8 and 111.2 respectively.
As a result of this growing confidence, 70 per cent of manufacturers plan to increase their investment and recruitment spending over the next six months, according to a separate survey by industry group EEF.
Business investment climbed around 10 per cent in the first quarter of 2014, official statistics have shown, after being sluggish since its sharp decline in 2009. The growth looks set to continue as companies flush with cash have begun splashing out on staff training, recruitment, research and development, software and marketing according to the EEF.
“Making progress towards better balanced growth remains a top economic priority and investment by manufacturers is and, must continue to be, a contributor to this process,” said EEF’s chief economist Lee Hopley.
And the renewed confidence seems to be spreading across the country.
Lloyds’ index of business activity hit 59.4 in England last month, the firm said this morning – well above the 50 level which indicates no growth. The highest figures were seen in the north of the England.