LONDON: Business confidence has improved since the decisive UK election result in May, but is still well below the peak of a year ago, a survey has found.
Businesses are reporting a worsening of skills shortages and a reluctance to make long-term investment plans, according to the poll by the Institute of Chartered Accountants in England and Wales (ICAEW) and Grant Thornton, the professional services firm.
Robert Hannah, chief operating officer at Grant Thornton UK, said: “The rebound in confidence is undoubtedly pegged to the rather surprising outcome of the general election and the clarity this offered, at least in the short term, on the UK’s political outlook.”
But he added: “That said, there are still a number of unknowns facing UK businesses which must be navigated over the mid to longer term, particularly as regards exports, talent and investment.”
A separate survey by the CBI employers’ group reported a slight rise in optimism among smaller manufacturers in the three months to July, alongside steady growth in new domestic orders.
But the relative strength of the pound against the euro hit export orders and margins. Export prices continued on a downward trend, falling at the fastest pace since October 2003, according to the survey of 408 companies.
The findings were published a few days after the strength of the economic recovery was underlined by new data showing that gross domestic product per head had returned to its pre-downturn peak.
The ICAEW business confidence index, based on interviews with 1,000 chartered accountants, suggested spare capacity in the economy had reached its lowest level since early 2008. The accountants said the shrinkage of spare capacity should provide a small boost to productivity — and a signal that a rise in interest rates could be drawing nearer.
