Economy to grow past pre-recession levels – BDO

THE economy is set to grow past its pre-recession level in the second half of this year, according to the latest Business Trends report from accountancy firm BDO.

It says the predicted growth will be fuelled by strong optimism and hiring intentions across all sectors of the economy, with manufacturers particularly positive.

This forecast is supported by BDO’s Output Index, which has risen to 102.7 in February from 102.3 in January, to stand at its highest level since April 2010.

Inflationary pressures continued to ease in February with the the BDO Inflation Index falling from 97.9 in January to 97.1. Falling real wages falling input prices contributed to the drop.

Partner Tim Entwistle, head of BDO in the North West, said: “On its current trajectory, we expect economic output to surpass the level last reached before the onset of the financial crisis by July this year, which will be a great relief to the Chancellor as we near the Budget. What’s more, the recovery has well and truly taken hold across all sectors, with manufacturing in particular driving strong job creation.

“However, as the remaining spare capacity in the economy is spent, the spectre of a skills shortage is likely to rear its head again, which could become a new drag on growth. There is increasing evidence that immigrants make a disproportionately positive contribution to our economy. It is vital that our political class takes notice of this evidence and starts to embrace immigration as a force for good in generating economic success.”