Businesses are on track to enjoy continued growth
The latest business trends report by accountants and business advisers BDO LLP in Scotland suggests that GDP growth over the next three months should be comfortably above the long term trend of 2.25%.
The BDO Output Index, which tracks UK businesses’ order books, held steady at 103.2 in November.
The sub-index for the manufacturing sector fell to 109.1, as weak Eurozone growth continued to undermine export orders, but this was cancelled out by a 0.3 point rise in the services sector sub-index, which accounts for three quarters of UK economic output.
The authors said this should put companies in a strong position for continued robust growth next year.
The BDO Optimism Index, which tracks how businesses expect orders to develop over the near term, fell from 104.6 in October to 103.9 in November, largely driven by stalling growth in the Eurozone.
Despite this the index, a good indicator of economic growth over the next six months, suggests that UK GDP should continue to expand at an annual rate in the range 2.5% to 3%.
The dip should be seen as a tempering of confidence rather than a slide back into difficult business conditions, the report stated.
Martin Gill, partner and head of BDO LLP in Scotland, said: “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.”
He was concerned that income tax receipts for the year have been lower than expected, suggesting that the quality of jobs being created is low.
He continued: “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.”