UK recession is ‘over’ as confidence grows

Elizabeth Judge and Grainne Gilmore

The UK recession has ended, according to a new study that found the biggest rise in business confidence in two years.

The Institute of Chartered Accountants in England and Wales (ICAEW) found a record rise in confidence among professionals.

Its gauge of business sentiment rose to 4.6 per cent for the third quarter, up from a record low of -45.3 in the first three months of the year, marking the biggest jump in the index since it began in 2003.

This is the first time the index, which represents the opinions of 1,000 accountants working in businesses across the country, has been in positive territory since 2007 and the first move by the study.

The optimism was further underpinned by expected rises over the next 12 months in 13 out of the 14 financial performance indicators the research studies.

Michael Izza, chief executive of the ICAEW, said the study “suggests the UK recession is at an end”.

Policies such as quantitative easing and interest rate cuts by the Bank of England and the drop in VAT had helped businesses to weather the financial storm, he said.

VAT was temporarily reduced from 17.5 per cent to 15 per cent in December in a bid to boost consumer spending in the recession.

Businesses had also helped themselves, he said, by adopting the right measures to ease the slump such as cutting staff.

Mr Izza warned against “underestimating” the challenges ahead, adding that “the recovery is very fragile and I would urge policy makers not to take any actions that could derail it.”

The study found that 41 per cent of senior business professionals were more confident about the economic prospects for their businesses; 6 per cent were “much more” confident.

The IT sector was the most confident, followed by banking, finance and insurance and property.

Sentiment was most upbeat in Wales, followed by Scotland and northern England. London and the South East remained the most nervous. (Elizabeth Judge and Grainne Gilmore, The Times)

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