Slight improvement in confidence, says BDO

AN “optimism index” collated by accountancy firm BDO has pulled back from a 21-year low suggesting the mood is improving.

The index, part of BDO’s monthly Business Trends report, increased by 1.7 points in February to 90.6, still well below a score of 95 which indicates growth.

It is based on predictions of business performance in the next two quarters.

Meanwhile, BDO’s Inflation Index, which measures inflationary expectations one quarter ahead, increased from 100.4 in January to 101.5 in February, its highest level since September 2012.

In addition, the Output Index, which predicts short-run turnover expectations, saw a decrease from 92.3 last month to 92.1 this month, suggesting that economic conditions will remain tough in three months time.

Jeff Jones, partner and head of BDO in Manchester, said: “We encourage the Bank of England’s 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 to the housing market.

“Not only have we got the most consolidated banking market in the G7, we also have the smallest corporate bond market. Action needs to be taken both to address these issues and to help the banks to accelerate economic recovery.”