Upturn expected before new year

New dawn: some market watchers believe the UK could pull out of the recession next month

With business bodies predicting the UK could shrug off the recession as early as next month, channel onlookers have claimed there are tangible signs of economic recovery.

Auditor BDO Stoy Hayward released its July Business Trends survey last week, which predicted the UK could claw its way out of the recession by the end of September. The report’s Output Index, which measures firms’ short-term order book expectations, enjoyed its largest monthly rise in 13 years, spiking from 92.3 to 95.1.

This brings the figure to more than 95 - which represents flat GDP ­- and stands in stark contrast to mainland Europe, where the picture is bleaker. In countries with the Euro as the unit of currency, the Output Index was 90.5 in July.

BDO partner Alex White claimed slashing interest rates had been one of a number of measures that have helped the UK economy.

Adam Harris, managing director of reseller Bear IT, claimed it was important for channel firms to keep their wits about them.

“There are two schools of thought: either we will start pushing out soon or this could be the calm before the storm and things may get worse next year,” he said.

“It is about being smart and keeping in as much contact with your customers as possible. We went into the recession pretty quickly and we can probably get out just as quickly. But we need to be a little cautious.”

More mildly encouraging news came in the Confederation of British Industry’s (CBI) quarterly SME Trends Survey. The report claimed medium-sized businesses are predicting sales growth will return next quarter. However, 51 per cent of respondents saw new orders fall in the second quarter of 2009.

A rise in orders was reported by 17 per cent, giving an overall -34 per cent balance. This was well up on last quarter’s -51 per cent figure, which was the worst balance since the survey’s inception in 1988.

Two fifths of respondents cut staff levels last quarter, with eight per cent adding staff. The resulting -32 per cent balance is a 12 point rise on the Q1 figure.
Matthew Woolley, chairman of trade body ITACS, claimed smaller VARs are starting to pick up business again.

“It is still tricky but there are green shoots and we could be out of the recession this year,” he said.

“SMEs are starting to spend again and there are companies that are more optimistic, who are moving premises or taking on staff.”