Companies' short-term confidence in business output has lifted for the first time in 17 months

Francesca Washtell
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Business output rose from 96.6 in October to 97.1 in November (Source: Getty)

Companies' short-term confidence in the UK's economy is becoming more upbeat, as figures out today show the outlook business output is brighter for the first time in 17 months.

According to accountancy firm BDO's business output index, which indicates how businesses expect to perform in the three months ahead, rose from 96.6 in October to 97.1 in November.

This suggests the UK economy has "stabilised", BDO said, though in a lower gear than it had been running at before the EU referendum in June.

Read more: Businesses kept on smiling following Brexit vote

BDO's employment index also rose, from 100.9 in October to 101.2 last month.

"This uptick in business output is a welcome boost during a turbulent time for businesses and the whole economy," said Peter Hemington, partner at BDO. "However, businesses remain nervous during this period of Brexit limbo and this nervousness is a significant contributor to the slower rate of growth we are seeing.

"Government can help with this. But the Autumn Statement, with its promises of only tiny increases in infrastructure spending was a disappointment, and a real contrast to the impact of Donald Trump on the US investment scene. A big tent approach to Brexit strategy, involving UK business in decision making, will also help."

Read more: Business optimism and output sink to three year lows on back of referendum

However, two of BDO's other indices indicate there could be a "bumpy road" in store next year.

Business optimism for manufacturers grew in November, from 92 to 94.1, but overall optimism in how firms expect their order books to develop in the coming six months fell from 98.5 to 98.

An uptick in BDO's inflation index also suggests inflation will be on the up next year as firms start to feel the effect of higher input costs. Higher inflation could, in addition, strike a serious blow to consumer spending next year, hitting a key area of UK economic growth.

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