The latest ICAEW / Grant Thornton UK Business Confidence Monitor (BCM) shows that business confidence has increased again in Q4 2013 to +31.7, up from +24.0 in Q3 2013, to reach its highest level in the BCM’s ten year history. Confidence has now increased for five consecutive quarters, the longest period on record, suggesting resilience in the current recovery.
The Confidence Index is a leading indicator for growth, and this quarter’s reading suggests that the economic recovery will continue to accelerate in Q4 following the 0.8% quarter-on-quarter growth seen in Q3 2013. This suggests that economic growth over 2013 as a whole will stand close to 1.5% – the strongest annual growth performance since 2010.
According to the BCM, the acceleration in the UK economy is feeding through into business financial performance. Key performance indicators are starting to pick up as companies report faster annual growth in turnover, gross profits and sales volumes this quarter. The latest figures for turnover and profit growth of 4.2% and 3.5% respectively are the highest seen in over a year, as the business environment improves. In line with the continued increase in business confidence, companies are expecting a further pickup in financial performance over the coming year, with growth of 5.4% and 4.7% expected respectively for turnover and gross profits.
The BCM survey also suggests that the current economic recovery is relatively broad-based from an industry sector perspective. Confidence has risen across all three main broad industry sectors in Q4 2013– construction, production industries and services. Overall, the UK looks on track to post one of the strongest – if not the strongest – 2014 growth performances of the major developed world economies.
More information about the BCM can be found here.