BDO predits continued business growth in 2015

BUSINESSES in Yorkshire are on track to enjoy continued growth in the first half of 2015 – even with deteriorating economic prospects in the Eurozone.

The latest Business Trends report by accountants and business advisers BDO in Yorkshire suggests that businesses order books “held steady” last month.

The report suggests that gross domestic product (GDP) growth over the next three months should be comfortably above the long term trend of 2.25%.

But weak Eurozone growth has continued to undermine export orders within the manufacturing sector although this was cancelled out by an increase in the services sector.

Overall, this should put companies in a strong position for continued robust growth next year.

Despite UK businesses’ underlying strength, the BDO “optimism index” which tracks how businesses expect orders to develop over the near term, fell between October and November.

This was largely driven by stalling growth in the Eurozone, the UK’s main trading partner and demonstrates the vulnerability to faltering international growth.

Terry Jones, partner and head of BDO in Yorkshire, said that this dip should be seen as a tempering of confidence rather than a slide back into difficult business conditions

He explained: “Despite the gloomy and deteriorating Eurozone economy, businesses are successfully weathering the storm and are on course to enter 2015 on the front foot, sustained by solid and continued growth.

“However, delve a little deeper and one developing trend poses cause for concern.

“Despite UK employment levels being on the up, income tax receipts for the year have been lower than expected.

“This suggests that the quality of jobs being created is low, while much is being made of job creation as evidence of economic policy success.

“Although the Chancellor has been careful not to trumpet it, one of the reasons the UK is such an economic bright spot in Europe is the pragmatic and flexible approach that he has taken to his deficit reduction plan. 

“This was exemplified by the focus on capital projects that was such a key feature of the Autumn Statement.

“With UK government borrowing continuing to be very cheap and “red lights flashing” in the world economy, we think that the government should do more in terms of investment in infrastructure to create well paid jobs and keep the recovery surging onward.”