Bloomberg News

U.K. Recovery Gathers Pace as Output Gauge Improves, BDO Says

June 09, 2013

U.K. Recovery Gathers Pace as Output Gauge Improves, BDO Says

Bank of England policy makers last week left their bond-purchase target unchanged at 375 billion pounds ($583 billion) as Governor Mervyn King said there are “signs now of a recovery.” Photographer: Matthew Lloyd/Bloomberg

Britain’s economic recovery is showing signs of strengthening, with indexes of confidence, output and employment rising, according to a survey by BDO LLP.

A gauge of company output expectations increased to 94.4, the highest since June 2012, from 94.1, and a business confidence index rose to 93.6 in May, the most in a year, from 93 in April, the accountancy firm said in a report in London today. A measure of employment intentions rose to 96.6 from 94.4. Still, the output index remains below the 95 level that points to positive growth one quarter ahead.

Bank of England policy makers last week left their bond-purchase target unchanged at 375 billion pounds ($583 billion) as Governor Mervyn King said there are “signs now of a recovery.” Growth nevertheless remains fragile, with lending by banks declining in the first quarter despite an extension of the bank’s Funding for Lending Scheme in April and increased incentives to get credit to smaller companies.

“It’s encouraging to see that U.K. business confidence has continued its upward trend, and that businesses have retained their healthy hiring intentions,” Peter Hemington, partner at BDO, said in the statement. “However, the government must do more to achieve the robust economic growth that remains tantalizingly out of reach. The government must look to ensure more funds are reaching British businesses through lending, in order to help them drive the U.K.’s economic recovery.”

A measure of inflation expectations rose to 104.2 last month, the most since January 2012, from 103.4, as the squeeze on incomes continued, BDO said.

Separately, KPMG LLP and the Recruitment and Employment Confederation said a gauge of permanent job placements rose to 53.4 in May, the highest level in six months. Readings above 50 indicate an increase in hiring.

To contact the reporter on this story: Svenja O’Donnell in London at sodonnell@bloomberg.net

To contact the editor responsible for this story: Craig Stirling at cstirling1@bloomberg.net


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