Economic Round-Up

Following on from the recent increase in forecast growth for UK economic output in 2014, to 2.5%, the BDO Business Optimism report has just recorded its highest result for 22 years. The report measures business optimism over the next two quarters and also noted that the hiring intentions of firms saw its highest rise since 2008.

Despite the undoubted economic turnaround and recent green shoots in exports and manufacturing, caution remains in some quarters however. Lord Turner, former City regulator and shortlist candidate for Bank of England Governor, has joined the ranks of those warning that the economy remains unbalanced and is too reliant on consumer spending, housing and financial services and faces the same risks the Japanese economy did in the 1990s.

Similarly, the National Institute for Economic and Social Research has highlighted the fact that wages are still 8% below their pre-recession level and that the consumer-led growth is being boosted by property and, crucially, not productivity. It points out that sustainable growth requires improvement in productivity and that the UK currently is lagging behind France, Germany and the US in this respect.

Here’s hoping 2014 sees a continuation of the recent improvements in manufacturing and export growth and that investment and productivity improvements follow quickly after. Unfortunately, continuing barriers to the accessing of capital by SMEs, headwinds in the Eurozone and slowing growth in emerging markets, still remain a drag on this.


Posted by John Hoskin