Introduction: UK economy at turning point as output rises

 

From 1h ago

07.40 BST

https://www.theguardian.com/business/live/2024/may/13/uk-economy-output-ultra-long-mortgages-ftse-pound-business-live

 

Introduction: UK economy at turning point as output rises

 

Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.

 

Having exited out of recession strongly last Friday, the UK economy appears to have turned the corner after a tough couple of years.

 

The latest Business Trends report, released by accounting and business advisory firm BDO this morning, shows that output rose last month to its highest level in almost two years.

 

BDO reports that UK business output and confidence rose in April, as the inflation pressures that have dogged firms for months ease.

 

This upturn has pushed up BDO’s output index by 2.09 points to 103.92 in April – the highest level since May 2022.

 

The UK’s services sector led the bounceback in April, says BDO, thanks to consumers having more money to spend at hospitality, retail and leisure companies as energy bills fall.

 

Hopes of a cut to UK interest rates by the autumn helped lift business confidence. Last week, Bank of England governor Andrew Bailey said it was “likely” that Bank Rate will be cut over the coming quarters, after the BoE left rates on hold again.

 

Worryingly, though, BDO’s employment index fell for the 10th month running, to its lowest level since February 2013, suggesting the UK jobs market is cooling.

 

Kaley Crossthwaite, partner at BDO, says:

 

“Cautious optimism is the order of the day for UK businesses hoping for an interest rate cut this summer.

 

“It’s heartening to see a turning point begin to materialise for the economy, with the services sector driving the bounce back so far from last year’s technical recession. But businesses across the board need more certainty from the government and we urge them to provide a clear, stable and long-term tax roadmap as soon as they’re able to, alongside much needed reforms to the apprenticeship levy.

 

Only once businesses have this will we start to see the more stable optimism, investment and hiring intentions needed for a robust recovery.”