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Consumer sentiment ‘protecting’ UK business, says BDO

UPBEAT sentiment among consumers is contributing to a positive business outlook despite increasing global economic concerns.

That’s the view to emerge from the latest BDO Business Trends Report. The firm’s employment index, which indicates companies’ intentions to hire, remains positive at 105.1, albeit marginally down from the month before. This suggests that employment will continue to rise over the coming months even though the latest ONS labour market figures show record 31.3m people in work.

Rising wages also contributed to the UK’s buoyant consumer outlook, with total pay packages up 2.4%, according to ONS labour market figures. The introduction of the National Living Wage is also set to give the worst paid employees a boost in April. Twinned with low inflation, consumers and businesses are feeling the benefits of low price rises with the BDO Inflation Index remaining at 96.4 for the second month running.

Consumer power is “protecting” UK business confidence for 2016 from global headwinds. BDO’s Optimism Index – which predicts growth six months ahead – remains above the long term trend at 100.5, despite other major economies facing turbulent times.

Commenting on the findings, Peter Hemington, Partner, BDO, said: “Consumers are really seeing the benefits of the UK’s strong economic recovery, and this is helping British firms to withstand tremors in the global economy. However, there is no room for complacency, and the government needs to protect economic growth by focusing on business investment.

“Initiatives such as raising the annual investment allowance would provide a greater incentive for companies to innovate and help to insulate the UK economy from risks abroad.”

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Jimmy Eyerman...Chief Financial Officer, EDM Group, USA