The capital starts the new decade with a spring in its step. In fact, it bounced along nicely (and ahead of the rest of the country) throughout last year, and still found space to cash in some pent-up investment in the wake of Boris Johnson’s electoral victory.
London’s dominance is a familiar story, but given it still serves as the engine for wider parts of the economy, its health matters — whether you’re reading this in Streatham or Stranraer.
But it seems it isn’t just the engine benefiting from an injection of fuel; the wider machine has been lubricated and tuned as, in the words of Deloitte’s chief economist, Ian Stewart, “the fog of uncertainty that has lingered over the UK since the 2016 EU referendum is lifting”.
The accountancy firm’s latest survey of chief financial officers (CFOs) showed the biggest ever increase in optimism in its 11-year history.
CFOs now expect UK firms to increase capital expenditure for the first time in four years. Stewart added: “The scale of the improvement [in sentiment] eclipses previous surges in the wake of interest rate cuts during the financial crisis in 2009 and following the European Central Bank president’s pledge to ‘do whatever it takes’ to save the Euro.”
Expectations of an increase in corporate revenues have surged — as has an appetite for risk. The Recruitment and Employment Confederation has also clocked a new mood among businesses, with the group’s permanent staff placement index nudging up to 51.9 in December, from a more cautious 48.8 the month before.
The REC survey was conducted over a two week period that included the General Election, so there may be further good news to come.
Purchasing manager surveys also paint a more positive picture than before the threat of a hung parliament or Labour victory evaporated. While the difficulties in sectors such as retail are well-known (and deep-rooted) we report today on a boost to the UK’s tech sector, with 74 per cent of executives at early-stage firms confident of a hike in turnover and 67 per cent planning to boost investment.
However, 69 per cent remain concerned that Brexit will make it harder to hire the talent they need, reminding us that not all of the B-word uncertainties have been smoothed over.
Indeed, with more MPC members flirting with a rate cut, all economic indicators will be closely watched in the coming weeks.
Main image: Getty