British business confidence is at its highest level since the global financial crisis of 2007, as the UK economy looks set to beat the Bank of England forecast for the second quarter of this year.
Export sales in the services sector hit their best levels since records began in 1989 and manufacturing firms are doing better than at any time in the past year, according to the quarterly survey from the British Chambers of Commerce (BCC).
The figures indicate that gross domestic product (GDP) growth for the period from April to June could be as high as 0.6 per cent, double that of the first quarter of 2013.
New Bank of England Governor Mark Carney will be pleasantly surprised, as this is an improvement on their forecast of 0.5 per cent for the same period. The BCC’s own prediction of a 0.9 per cent growth for the whole year also now looks set to be trumped.
John Longworth, director general of the BCC, said: "British firms are doing their utmost to drive recovery. The sheer strength of our export balances shows that companies have untapped potential to expand.”
As export sales in services rose to a balance of 36 per cent, the BCC’s chief economist David Kern added that: “Developing the export potential of this sector is critical to long-term prosperity.”
The equivalent numbers for manufacturing firms hit 23 per cent, while confidence in turnover growth rose to 51 per cent.
The survey involved more than 7,400 services and manufacturing businesses in May and June.
Despite these positives, official figures yesterday showed that loans to non-financial firms fell by £1.3 billion in May, including a £452 million drop in lending to small and medium-sized companies.
Britain’s economic recovery is still the weakest of any of the G7 countries (US, UK, France, Germany, Italy, Canada and Japan) apart from Italy, but the BCC’s survey results could be enough to prevent the Bank of England proposing further asset purchases at its monthly Monetary Policy Committee meeting on Thursday.