Economic Indicators

UK businesses more optimistic this year, BCG survey shows

FILE PHOTO: A woman holds a child in front of Canary Wharf skyline, in London, Britain September 14, 2020. REUTERS/Hannah McKay/File Photo

LONDON (Reuters) – British businesses are more optimistic this year about their profits and broader economic growth than they were last year, an annual survey by Boston Consulting Group showed on Wednesday.

The findings – based on a poll of 1,500 businesses between Jan. 4 and Jan. 15 – show a similar pattern to closely watched purchasing managers’ index figures, which recorded the fastest growth in eight months in January.

Britain’s economy entered a shallow recession in the second half of 2023, but Bank of England Governor Andrew Bailey has said he has been encouraged by signs of a modest pick up, bolstered by lower inflation and expectations of interest rate cuts.

“We are seeing signs of emerging optimism amongst business leaders in the UK,” Raoul Ruparel, director of BCG’s Centre for Growth, said. “Business leaders largely expect to maintain or grow their headcount and over half plan to raise prices by more than 6% this year,” he added.

The survey showed that 47% of business leaders think economic growth will be better by the end of the year, compared with 37% last year.

Four in five businesses were confident about their prospects over the next year compared with three-quarters of businesses last year. Half expect profits to rise over the next 12 months.

Businesses’ biggest worry was high energy prices – concerning 41% of firms – followed by the slowing economy, named by 36% as their top concern.

Ahead of a national election expected later this year, 41% said energy policy should be one of politicians’ top three priorities, followed by 33% who wanted changes to business taxation and 21% who listed employment taxes.

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