Rosy outlook for UK economy
BDO Stoy Hayward report points to growth in latter half of 2006
The last two quarters of the year could be lucrative for the channel as UK economic growth is set to accelerate in the second half of 2006, according market watcher BDO Stoy Hayward.
The latest BDO Business Trends Report has revealed a leap in business confidence in both the short and medium term. Growth is expected to reach 3.4 per cent in the third quarter of 2006, compared to 2.4 per cent in the final quarter of 2005, and to continue at this level until the end of the year.
As a result, it looks like the UK economy will provide a pleasant surprise for businesses and the Chancellor alike later this year. Contributing factors include a consumer spending rebound, European economic recovery and a rapidly rising stock market.
Peter Hemington, partner at BDO Stoy Hayward, said: "Short-term confidence has risen to its highest level in over two years and it is good to see that medium-term confidence has stabilised at its highest point since last April. Businesses are responding by planning for better times ahead - stocks are being built up and capital expenditure looks set to rise in the coming months."
BDO Stoy Hayward has also predicted that the Monetary Policy Committee (MPC) will keep interest rates on hold for the rest of 2006.
Douglas McWilliams, chief executive of the centre for economics and business research, added: "The Bank of England will be relieved to see the inflation index remaining at a level compatible with its target. But, with inflation showing no signs of falling significantly below two per cent, and oil prices still threatening, there is no suggestion yet that the MPC should consider interest rate cuts"
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