UK prospects 'better' but only short-term, says survey
A survey of UK businesses says short-term business prospects
have improved, with the consensus on current trading levels at a
However the eurozone crisis may harm longer-term growth, says
the report on the survey by the Centre for Economic and Business
Research for business services firm BDO LLP.
BDO's Output Index, compiled from business surveys covering some
11,000 respondents, rose to 96.7 in May.
A reading above 95 indicates growth.
BDO said its findings suggested the UK was returning to growth.
May's reading was the highest level for a year, it said. In April,
the index was put at 95.8.
Despite the better reading for output, BDO found that confidence
had taken a knock.
BDO's Optimism Index has dropped for the third consecutive
month, from a peak of 98.0 in February to 95.5 in May.
That index, measuring expected business performance two quarters
ahead, suggests that UK firms expect growth to tail off later in
2012, according to BDO.
Peter Hemington, a partner at BDO LLP, said the eurozone crisis
was casting a long shadow: "Given that half the UK's export goods
go to the eurozone, it's hardly surprising that the ongoing
turbulence there is denting longer-term growth prospects here.
"The biggest issue for UK businesses at the moment is that the
strength of the pound against the euro has made UK exports much
more expensive, significantly denting export and growth
He continued: "It's clear that UK business people are worried by
the eurozone crisis and are scaling back plans for hiring and
investing. This massively threatens the already fragile growth
prospects for the economy."
The government should consider boosting growth by spending on
infrastructure, taking advantage of the low cost of government
borrowing, he urged.