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Economic conditions

UK Business Output and Optimism Reach Highest Levels Since 2000

Strategic Insights

— 1 min read

Business output and optimism in the UK have reached their highest levels since May 2000, according to a new survey by BDO Stoy Hayward, the accountancy and consultancy company. The report forecasts healthy domestic demand and an improving world economy will lift the UK's economic growth to 2.3 per cent in the first half of the year. However, many economists still expect the Bank of England to keep interest rates on hold when it meets this week, citing soft consumer activity around Christmas as a major concern.

Key Takeaways:

  • Business output and optimism in the UK have reached their highest levels since May 2000, according to a BDO Stoy Hayward survey.
  • The report forecasts the UK's economic growth to reach 2.3 per cent in the first half of the year, driven by healthy domestic demand and an improving world economy.
  • Economists expect the Bank of England to keep interest rates on hold when it meets this week, citing soft consumer activity around Christmas as a major concern.
  • Inflationary pressures are rising gradually towards the Bank's 2 per cent target, with prices rising at about 1.3 per cent annually.
  • Economists largely agree that the MPC would hold rates this week, but some expect the next rise to come in February, coinciding with the Bank's quarterly inflation report.
  • Economists expect consumer activity to remain fairly robust as long as unemployment remains low and house prices firm.
  • Recent surveys forecast further above-inflation rises in house prices this year.
  • Data on Friday showed manufacturing activity last month grew at its strongest rate in four years, with hiring growing at its fastest since October 1997.

Statistics:

  • Business output and optimism in the UK have reached their highest levels since May 2000.
  • The report forecasts the UK's economic growth to reach 2.3 per cent in the first half of the year.
  • The harmonised index of consumer prices measure of inflation shows prices rising at about 1.3 per cent annually.
  • The Bank of England's 2 per cent inflation target is expected to be reached within the coming year.
  • Interest rates are currently at 3.75 per cent.
  • Manufacturing activity last month grew at its strongest rate in four years.

Sources:

  • BDO Stoy Hayward survey, cited in JENNIFER HUGHES's article.
  • Investec economist, David Page, cited in JENNIFER HUGHES's article.
  • UK economic data, cited in JENNIFER HUGHES's article.

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