BDO’s Optimism index jumped from 99.4 to 103.2 in March, a high not seen since the summer of 2006. The Output Index also increased, reaching quarter three 2007 levels, off the back of companies re-stocking.
But the accountancy firm warned that business optimism could be short-lived unless the three main political parties make clear their economic policies for the near future.
“The lack of information from political parties regarding concrete plans to tackle the deficit will be contributing to business uncertainty which in turn is keeping investment levels low in 2010,” the company said.
BDO’s Employment Index showed that the lack of investment has led to businesses refusing to hire new staff. The sluggish job market and the increasingly high levels of taxation mean consumer spending will remain low. Weak earnings growth, the reversal of the VAT cut and large levels of household debt will also hinder growth, it added.