Sun rising on UK business?

A slew of good economic news this morning: anyone would think the sun had come out...

by Emma Haslett
Last Updated: 02 Aug 2013

Blimey: the weather must be good, if even economists are doing the financial forecasting equivalent of handing everyone a 99 Flake.

First, to Lloyds TSB’s bi-annual (every six months, not every two years) Business in Britain survey, which has discovered an overwhelming mood of optimism among the UK’s businesses.  

The survey’s confidence index has jumped by 11 points to 30% over the past six months, well up on its average level of 21%. Business’ new-found confidence is driven by an expectation they’ll spend more on machinery and take on more staff over the next six months, the report suggests.

Half of businesses reckon sales will grow in the next six months, the survey found, while a relatively small 14% reckon sales will fall.  

Unsurprisingly, businesses are less confident about their ability to export to Europe than the rest of the world, with 23% expecting their total exports to Europe to grow, while 13% reckon they’ll drop. That said, 28% say exports to the rest of the world will rise, compared with 8% who believe they’ll fall. Not bad, on the whole.

To the Ernst & Young Item Club next. Having said this time last month that UK consumers were http://www.managementtoday.co.uk/news/1185605/Consumer-spending-will-rise-again/ about to indulge in a massive shopping spree, the Item Club now reckons UK growth will start to pick up.

According to its latest predictions, growth will be 1.1% this year, 2.2% next year and 2.6% in 2015, dropping back slightly to 2.5% in 2016 and 2017 – not bad, considering the decidedly anaemic 0.2% growth we saw last year.

The group did, however, point out that the UK is currently relying too much on consumer spending and the housing market, and that the economy needs to look to more sustainable sources of growth. But it added that ‘this time around the recovery looks much more sustainable, and should be given legs by a rebound in business investment and exports from 2014’.

Crikey – after all that joyous news, MT needs to restore its sense of reality. Step forward, the TUC, which has published a report saying most of the new jobs created in the past three years have been in low-paid industries.

According to the report, of the 587,000 new jobs created since June 2010, 80% have been in industries where the average pay is £7.95 an hour or less. And although there’s also been growth in high-paying jobs such as computing, which pays £18.40 an hour, job creation in middle-income jobs has dried up.  

Frances O’Grady, the organisation’s general secretary, says one of the ‘unreported struggles of recent years’ has been the move of people made redundant from middle-income jobs into low-paid work.

‘Many people who are forced into low-paid work are not only having to take a massive financial hit, but are having to put their careers on hold,’ she said.

Thank goodness for that. MT was at risk of being blinded by the optimism of it all…

- Image: Flickr/davehunt82

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