A survey of more than 10,000 companies across the world by Grant Thornton, the accountants, found that nearly three quarters of UK-based businesses said they were hopeful for the coming year, a figure only trumped in Europe by Ireland, reports The Times.
Whether it is profitability, the prospects for exporters, or plans to increase investment and research, British companies appear to believe that things can only get better, with the proportion of companies saying that they expected their profits to rise jumping 23 percentage points to 63 per cent.
The CBI’s end of year survey echoed the Grant Thornton report. It reported that a balance of 20 per cent of the 766 companies interviewed had recorded an increase in output in the final quarter, a distinct improvement on November and well above the long-run average of 5 per cent. Robert Hannah, from Grant Thornton, said that despite fears over issues such as the migrant crisis or the pending vote on EU membership, British businesses appeared unruffled.
“In many ways, the UK’s optimism is testament to the new-found resilience of our economy in light of the myriad challenges it has faced over recent years,” said Mr Hannah.
Even the slowdown in China, the source of much of the global growth since the financial crisis, has done little to dent the positive mood, with the UK well placed to benefit as the world’s second largest economy shifts its consumption away from commodities to services in which Britain specialises.
However, even here the Grant Thornton survey showed a better picture than many might expect, with business confidence growing in many Asian countries, including China.
The latest survey figures will provide welcome relief after poor third quarter numbers, when UK growth slowed to only 0.4 per cent, raising concerns about the economic recovery.
“The UK has finished the year strongly, with business services acting as a lightning rod for growth,” Carolyn Fairbairn, director-general of the CBI, said. “Manufacturers are having a tough time, with the strength of sterling hitting their competitiveness in the Eurozone and the slowdown in emerging markets weighing on export demand.”
Official third-quarter growth figures released last month confirmed that the recovery continued to be driven by consumers, with household spending rising at an annual rate of 3 per cent while manufacturing was in recession.
Overall, the private sector is optimistic about the start of 2016. The CBI’s Growth Indicator showed that companies expect to grow at a similar pace over the coming three months. Some 20 per cent of companies were positive about the outlook, above the long-run average of 10 per cent.
However, the CBI warned that companies faced challenges in 2016 from slower growth in China. It also said that UK competitiveness could be harmed by the combination of the apprenticeship levy, the national living wage and unreformed business rates.