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UK to avoid triple dip recession

Doomsayers warning of a triple-dip recession will be proved wrong, according to the latest business confidence monitor (BCM) from ICAEW and Grant Thornton.

The latest confidence index rose 4.2 points from quarter four in 2012 and reached its highest level since quarter two in 2011.

Law firm, Grant Thornton, and chartered accountants body, ICAEW, said these figures could mean the UK will avoid a third dip in the recession.

Companies responding to the survey reported an average 3.3% rise in turnover and predicted a further 4.6% rise over the coming year.

Profits were also up in 2012 by 2.5%, and businesses predicted an average 3.9% improvement in 2013.

Michael Izza, chief executive of ICAEW, commented: “There was a risk that, combined with the traditional January blues, the bad weather and some high profile retail collapses, talk of a triple dip recession could become self-fulfilling.

“These results show that we are set to avoid a third period of technical recession, but no one should be complacent.

“There is only one way out of our economic malaise, and that’s to increase our economic output. Such a task isn’t going to be easy, or indeed quick.”

Regionally, the South East and Wales responded most positively to the survey, which was carried out between October and January, while businesses in I.T, communications and construction posted the highest levels of confidence.

Despite the rise in financial confidence, many firms said the lack of management skills were concerning as they look to increase staff levels.

While many businesses plan to push their employment levels, some expressed their worries that many could be employed in the wrong sector or role, and skills could be placed ineffectively in the market.

One in ten firms said the availability of management skills is a harder challenge than this time last year, while headcount rose by 1% last year and companies have plans to push this figure up by an additional 1.5% this year.

The surveyors maintained that, although management skills are an issue, the UK economy will ride out the recession on improving business confidence.

Scott Barnes, chief executive of Grant Thornton UK, said: “Export growth rose slightly this quarter as the global economy picked up.

This could be a sign that the export-led recovery we need may be beginning. This is coupled with an improvement in both profit and turnover growth, which companies expect to increase in the year ahead.

“Despite a rise in confidence though, companies’ modest plans for capital investment are a worry as this is crucial to a strong and sustained recovery.”

This was posted in Bdaily's Members' News section by Miranda Dobson .