Firms say UK economy may be improving

Tim Wallace
Follow Tim
BRITISH firms are increasingly confident about the economy’s prospects making a return to recession less likely, according to Lloyds Bank’s business barometer, published today.

However, economic growth is still likely to be slow, forecasts out today from the British Chambers of Commerce (BCC) show, and research from RBS suggests firms are still unwilling to invest in new equipment.

Lloyds’ study shows 38 per cent of firms were more optimistic about the economy in February than they were three months earlier, compare with 37 per cent who were more pessimistic – a positive balance of one per cent.

The balance is up twelve points on the minus 11 per cent seen a month earlier, and up 24 points from the minus 23 per cent seen in December.

“A rise in business confidence is to be welcomed – however both indices remain below their long-run averages and confidence is likely to remain fragile,” said Lloyds’ Trevor Williams.

That caution is backed up by RBS research showing British firms are turning down contracts worth £2.3bn per year because they are reluctant to invest while the economy is weak – despite efficiency gains they could expect from newer equipment.

Meanwhile the BCC today predicted “a relatively long period of low growth” because “debt levels are still too high and the process of deleveraging will depress demand.”