UK economy gets end of year boost as City jobs market flourishes

Inside The City Of London's New Landmark Skyscraper
The rise in jobs is the first year-on-year rise since the Brexit vote (Source: Getty)

The economy will end the year on a high note with an upswing in the City’s job market, improved growth forecasts and a brighter outlook for business output.

A survey from professional services recruiter Morgan McKinley out today shows the City’s job market picking up pace again following the Brexit vote.

There was a six per cent year-on-year increase in professional jobs available for November, the first year-on-year rise recorded by the recruiter since June’s vote to leave the EU.

“Heading into the new year with a higher base of jobs compared to last year bodes well for City employment in 2017,” said Hakan Enver, operations director at Morgan McKinley Financial Services.

The British Chambers of Commerce (BCC) will announce today that it has revised up its UK growth forecasts for 2016 and 2017.

This year’s annual GDP growth rate has been upgraded to 2.1 per cent from 1.8 per cent, as firms continue to invest and household consumption stays relatively strong after the Brexit vote. Growth estimates for 2017 have also been revised upwards slightly, from one per cent to 1.1 per cent.

“Many companies have been adopting a ‘business as usual’ approach in the months since the referendum, which has kept conditions buoyant this year and prevented a sharp slowdown in growth,” said BCC director general Adam Marshall.

However, investment uncertainty and likely higher inflation following the devaluation of sterling in the aftermath of the EU referendum have prompted the BCC to downgrade its forecast of GDP growth for 2018 from 1.8 per cent to 1.4 per cent.

The business group added that inflation may be set to rise to 2.1 per cent and 2.4 per cent in 2017 and 2018 respectively, but this prediction is significantly lower than the Bank of England’s forecasts, which predict a peak of 2.8 per cent next year.

Meanwhile, the BDO 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 was the first increase recorded in 17 months.

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

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.”

- Additional reporting by Francesca Washtell

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