'Resounding' confidence boosts put UK firms' outlook on 4-year high

OPTIMISM among UK businesses was at its highest level for around four years last month, an industry survey shows today.

Firms registered "resounding" jumps in confidence and output in March, according to the latest Business Trends report by accountants BDO LLP, with its optimism index at the highest level since the summer of 2006.

However, the report also warned of a risk to recovery without a "significant increase in investment from businesses in the private sector" and called on political parties to give more details of their economic plans.

According to BDO, whose Business Trends Report takes a weighted average of the results of all the UK's main business surveys carried out during the past month, the index of output has reached heights not seen since before the onset of recession in the third quarter of 2007.

The group said a rise in the output index, which measures short-term turnover expectations, means companies are restocking and this is boosting order books.

However, the report also states that while general optimism had grown, its employment index signalled rising unemployment as firms lacked sufficient confidence to take on new staff.

"The sluggish job market, expectations of higher taxes, weak earnings growth, the reversal of the VAT cut and large levels of household debt mean consumer spending will remain weak and unable to fuel growth," it states.

BDO urged political parties to provide "clarity" for businesses on their policy intentions and said lack of information over plans to tackle government debts was causing uncertainty.