The economy will grow by 1.3% in the fourth quarter of 2014 as confidence among businesses in the UK continues to increase, according to the latest ICAEW/Grant Thornton UK Business Confidence Monitor (BCM).
The BCM's confidence index is currently at its highest level in the 10 years the report has been running, now standing at +31.7, up from +24.0 in Q3 2013. This is the fifth quarter of rising confidence, the longest sustained period of continued optimism recorded.
Businesses have reported the strongest expected employment growth since the financial crisis with an average increase of 1.7% in headcount over the next 12 months. However, banking, finance and insurance is the only sector to have lost jobs over the past year, and to expect to continue to do so.
Overall, turnover is expected to grow by 5.4% in the next 12 months compared to 4.2% the 12 months before. Profit growth will see similar increases (4.7% v 3.5%). The construction and property sectors have both seen particularly high confidence this quarter, with the property sector reporting a confidence Index of +44.0, compared to +18.2 in Q3 2013.
Michael Izza, chief executive of ICAEW, said: 'This quarter's report shows that the UK economic recovery is well underway. If it continues at this rate, the UK economy will be one of the fastest growing economies in the western world going into 2014. As significantly, the shape of the recovery is changing as businesses respond to rising confidence by looking to new markets and increasing their investment plans.'
A separate report, the Global Economic Conditions Survey (GES) carried out by the ACCA and the Institute of Management Accountants (IMA)Report shows that confidence in the global economic recovery among finance professionals is now the strongest it has ever been since the survey began in early 2009.
At the global level, more than half (53%) of respondents now believe that economic conditions are improving or about to do so, up from 47% in the previous quarter. The share of respondents expecting stagnation or further deterioration fell from 50% in Q2, to 43% in the third quarter. It is the first time in the history of the survey that the optimists have outnumbered the pessimists.
The report indicates the UK is leading the European recovery, with 62% of respondents believing that the economy is improving or about to do so, up from 42% in Q2 2013. UK respondents also reported improved levels of business confidence in Q3 2013, rising to 42% confidence this quarter from 26% in Q2. Just 20% reported a loss of confidence, down from 30% in the previous quarter.
Emmanouil Schizas, senior economic analyst at ACCA, said: 'These figures suggest that the UK economy has substantially outperformed most major ACCA and IMA markets in the third quarter of 2013. The reason behind this is a dramatic improvement in access to growth capital over the last six months, which has prompted an equally impressive increase in investment and employment. Meanwhile, pressures on cashflow and demand are falling, adding to the sense that conditions on the ground are easing.'
