Business confidence is improving, according to the BDO Optimism Index - which nudged up by 1.7 points in March - a marked improvement from the 21-year low recorded in January, reports Harris & Co accountants Northampton.
But despite the increase, BDO’s Business Trends report found that companies do not expect any growth over the next two quarters, while a 1.1 point rise in the BDO Inflation Index suggests further pressure on bottom lines.
Meanwhile, there are signs of recovery further down the road with the six-month projections of business performance increasing to 90.6 in February from 88.9 in January, the biggest increase for five months. However, the overall picture remains downbeat, with the index remaining stubbornly below 95.0 – the mark which indicates growth – where it has remained since May 2012.
Peter Hemington, a BDO partner, said: ‘We encourage the Monetary Policy Committee (MPC) to increase its quantitative easing programme, but the government needs to take further action to ensure that funding goes to where it is most needed - to British business and the housing market.
‘Not only has the UK got the most consolidated banking market in the G8, it also has the smallest corporate bond market. Action needs to be taken both to address these issues and to help the banks to accelerate economic recovery.’