Businesses hopeful of recovery prospects

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Business confidence is slightly up, according to the latest ICAEW/Grant Thornton UK Business Confidence Monitor. After four consecutive quarters of decline the index saw a rise of 4.1 to plus-13.7 this quarter as businesses feel more certain about the UK's economic prospects.

Michael Izza, the chief executive of ICAEW, said: "Growth and certainty are returning to the UK economy. Businesses are more optimistic about the future and this is reflected in their forecasts for turnover and profit growth. They are however wary of the reality that the recovery is going to be slow. As a result, there is greater caution over making long-term commitments and investment."

However, growth in exports, a key factor for economic recovery for the Government, now seems to be levelling off. Export growth increased from 4 per cent to 4.3 per cent in the 12 months to the second quarter of 2011, a relatively small improvement compared with gains seen over the previous three quarters.

Retail and wholesale was the only sector to record a negative score (of minus 1) as consumers come under increasing pressure due to slow growth in wages combined with higher inflation.