Business confidence 'at an 18 month high'

 

Business confidence is increasing and the bank lending drought is easing, according to a series of new surveys today that fuel hopes the economy could be slowly turning around.

But City experts are still warning that a sharp rise in investment is needed to ensure a “sustained” recovery.

And while the Bank of England is expected to stay its hand on further stimulus at its rate-setting meeting this week, economists expect it will have to pump more money into the economy later this year.

Business confidence is an 18 month high, according to surveys published today by both Icaew/Grant Thornton and Lloyd’s Bank, with the former predicting that the surge in its Business Confidence Monitor index from + 4.2 at the end of last year to 12.8 now suggests the economy will grow by 0.4 per cent in the first quarter, avoiding a triple dip recession.

Lloyds Bank, whose monthly Business Barometer finds that the net balance of firms that are positive about their trading outlook rose 6 points to 46 per cent in January, is also forecasting a “ modest expansion” in the economy of 0.3 to 0.4 per cent.

The rise in corporate confidence comes as the Ernst & Young Item Club reports that lending to businesses and households is at the healthiest levels since 2010. After an estimated 4 per cent fall last year – to its lowest level since 2006 – bank lending to firms is forecast to rise 2 per cent this year. 

“Although  growth in lending may seem modest, it will be the fastest growth in bank lending since 2010 and marks the beginning of the end of the painful period of deleveraging the banks have been forced to go through,” E&Y Item Club’s senior economic adviser Carl Astorri said. “We don’t expect the impact on the economy to be instantaneous but, as lending continues to pick up in 2014 and 2015, the money should start to trickle through to cash-starved small and medium sized enterprises.”

According to Icaew, the private sector has seen a 1 per cent rise in staff in the past year, and firms expect to increase jobs by 1.5 per cent over the next 12 months. Its findings are echoed by the recruiter Reeds, which today reports a “steadily strenghtening jobs market”,  with vacancies up 12 per cent on a year ago and 3 per cent on last month.

However, experts are still worried by the lack of business investment. “Despite a rise in confidence, companies’ modest plans for capital investment are a worry as this is crucial to a strong and sustained recovery,” Scott Barnes, the chief executive of Grant Thornton UK, said.

Trevor Williams, the chief economist at Lloyds Bank Commercial Banking echoed the concerns, saying: “We hope greater confidence will persuade companies to increase investment spending to help sustain the nascent signs of economic recovery”.

A slew of economic reports, including construction and retail figures, due this week is nevertheless set to show the economy was hit by last month’s snow and ice. But although the economy also recorded a surprise 0.3 per cent fall at the end of last year, the Bank’s Monetary Policy Committee is expected to wait to see if the recent fall in sterling and the Funding for Lending Scheme boosts growth before taking more stimulus action, according to IHS Global Insight’s chief economist Howard Archer.

“Recent indications are that the economy may be seeing modest underlying growth early on in the first quarter of 2013. Survey evidence available so far shows a decent rise in consumer confidence in January (although it is still week) while the purchasing managers have reported some increase in manufacturing activity and the CBI has indicated moderate growth in retail sales,” Mr Archer said.

He predicts the MPC “will hold fire until at least the second quarter” as it watches to see if inflation is picking up.

Arts and Entertainment
Gregg Wallace in Summer's Supermarket Secrets
tv All of this year's 15 contestants have now been named
Sport
The giant banner displayed by Legia Warsaw supporters last night
football Polish side was ejected from Champions League
Arts and Entertainment
Could we see Iain back in the Bake Off tent next week?
tv Contestant teased Newsnight viewers on potential reappearance
News
i100(and it's got nothing to do with the Great British Bake Off)
PROMOTED VIDEO
News
ebooksAn evocation of the conflict through the eyes of those who lived through it
Voices
The Ukip leader has consistently refused to be drawn on where he would mount an attempt to secure a parliamentary seat
voicesNigel Farage: Those who predicted we would lose momentum heading into the 2015 election are going to have to think again
Arts and Entertainment
Cara Delevingne made her acting debut in Anna Karenina in 2012
film Cara Delevingne 'in talks' to star in Zoolander sequel
News
i100
Sport
Mario Balotelli pictured in his Liverpool shirt for the first time
football
Life and Style
tech
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

SAS Business Analyst - Credit Risk - Retail Banking

£450 - £500 per day: Orgtel: SAS Business Analyst, London, Banking, Credit Ris...

Project Manager - Pensions

£32000 - £38000 Per Annum Bonus, Life Insurance + Other Benefits: Clearwater P...

KYC Analyst, Birmingham - £200-£250 p/d

£200 - £250 per day + competitive: Orgtel: KYC Analyst, Key Banking Client, Bi...

Test Manager - Banking - Yorkshire - £450 per day

£400 - £500 per day: Orgtel: Test Manager - Banking - West Yorkshire - £400-£5...

Day In a Page

Ukraine crisis: The phoney war is over as Russian troops and armour pour across the border

The phoney war is over

Russian troops and armour pour into Ukraine
Potatoes could be off the menu as crop pests threaten UK

Potatoes could be off the menu as crop pests threaten UK

The world’s entire food system is under attack - and Britain is most at risk, according to a new study
Gangnam smile: why the Chinese are flocking to South Korea to buy a new face

Gangnam smile: why the Chinese are flocking to South Korea to buy a new face

Seoul's plastic surgery industry is booming thanks to the popularity of the K-Pop look
From Mozart to Orson Welles: Creative geniuses who peaked too soon

Creative geniuses who peaked too soon

After the death of Sandy Wilson, 90, who wrote his only hit musical in his twenties, John Walsh wonders what it's like to peak too soon and go on to live a life more ordinary
Caught in the crossfire of a cyber Cold War

Caught in the crossfire of a cyber Cold War

Fears are mounting that Vladimir Putin has instructed hackers to target banks like JP Morgan
Salomé's feminine wiles have inspired writers, painters and musicians for 2,000 years

Salomé: A head for seduction

Salomé's feminine wiles have inspired writers, painters and musicians for 2,000 years. Now audiences can meet the Biblical femme fatale in two new stage and screen projects
From Bram Stoker to Stanley Kubrick, the British Library's latest exhibition celebrates all things Gothic

British Library celebrates all things Gothic

Forthcoming exhibition Terror and Wonder: The Gothic Imagination will be the UK's largest ever celebration of Gothic literature
The Hard Rock Café's owners are embroiled in a bitter legal dispute - but is the restaurant chain worth fighting for?

Is the Hard Rock Café worth fighting for?

The restaurant chain's owners are currently embroiled in a bitter legal dispute
Caribbean cuisine is becoming increasingly popular in the UK ... and there's more to it than jerk chicken at carnival

In search of Caribbean soul food

Caribbean cuisine is becoming increasingly popular in the UK ... and there's more to it than jerk chicken at carnival
11 best face powders

11 best face powders

Sweep away shiny skin with our pick of the best pressed and loose powder bases
England vs Norway: Roy Hodgson's hands tied by exploding top flight

Roy Hodgson's hands tied by exploding top flight

Lack of Englishmen at leading Premier League clubs leaves manager hamstrung
Angel Di Maria and Cristiano Ronaldo: A tale of two Manchester United No 7s

Di Maria and Ronaldo: A tale of two Manchester United No 7s

They both inherited the iconic shirt at Old Trafford, but the £59.7m new boy is joining a club in a very different state
Israel-Gaza conflict: No victory for Israel despite weeks of death and devastation

Robert Fisk: No victory for Israel despite weeks of devastation

Palestinians have won: they are still in Gaza, and Hamas is still there
Mary Beard writes character reference for Twitter troll who called her a 'slut'

Unlikely friends: Mary Beard and the troll who called her a ‘filthy old slut’

The Cambridge University classicist even wrote the student a character reference
America’s new apartheid: Prosperous white districts are choosing to break away from black cities and go it alone

America’s new apartheid

Prosperous white districts are choosing to break away from black cities and go it alone