By Noah Eastwood
The worst of the UK’s economic downturn could soon be over, with companies reporting supply chain cost increases are beginning to slow down.
Figures published by BDO found that business confidence rose in March in reaction to a 2.19 percent ease in the advisory firm’s inflation index rate from 113.18 in February to 110.99 in March.
Tumbling inflation is likely due to cheaper wholesale energy prices that have finally allowed pressure on supply chains to ease.
As a result, BDO’s business optimism index has remained in a positive reading for the third consecutive month, at 97.09, indicating businesses are confident of growth and believe the worst of the UK’s economic slump has now passed.
The business output index posted similarly strong figures, maintaining a seven month-high at 99.48. The sustained rise suggests the UK economy grew in March, led by expansion of the services sector for two months in a row.
The employment index likewise posted a second monthly net positive reading of 110.35, up 0.17 since February. The rise is driven by improved hiring intentions among services firms in response to surging business output.
Kaley Crossthwatie, a partner at BDO, said “It’s encouraging to see business optimism leading to renewed hiring intentions once more as businesses see input price and supply chain pressures ease slightly.”
“However, with the less generous Energy Bills Discount Scheme now in place and expectations of a recession remaining, the economy is likely to face further headwinds despite recent resilience.”
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