Business output at highest level since May 2022.

Recent business surveys are pointing to a bright next few months for the UK as the economy finally feels the benefit of falling inflation. Economic output climbed to its highest level since May 2022 last month, according to the BDO Business Trends report, which collects and regroups data from the UK’s main business surveys.

The accountancy’s output index climbed to 102.39, above the 100 no change mark for the first time since July 2022 and comfortably higher than the 98.67 recorded in February. The improvement was driven by increased consumer demand, reflecting lower inflation, and supportive fiscal policy.

Partner at BDO, Kaley Crossthwaite, said the data illustrates the UK’s “robustness in the face of global economic adversities.” The BDO’s survey will come as a boost for Chancellor Jeremy Hunt ahead of the general election.

Consequently, optimism among CFO’s at the UK’s largest firms increased for the third consecutive quarter as the UK economy’s rosier economic prospects filtered through into corporate confidence.

With inflation falling fast and interest rates likely to be cut in a matter of months, CFO’s are much more confident about their business prospects than is normally the case. A net 17 per cent of CFO’s are more positive about the financial prospects for their business than they were three months ago, according to a Deloitte survey. The accountancy firm has been conducting surveys over the last sixteen years.

Uncertainty also fell to its lowest level since summer 2021, when lockdown restrictions were coming to an end.

Chief economist at Deloitte, Ian Stewart said: “Optimism among the UK’s largest businesses is running at well above average levels, suggesting that the worst of the economic downturn is behind us, with current sentiment at levels that preceded periods of good growth in 2010, 2014 and 2021.” He added: “For the first time in three years, CFOs expect margins to increase over the next 12 months.” There were 64 CFOs that participated in the latest quarterly survey including finance bosses at eight FTSE 100 companies and 23 FTSE 250 firms. The survey showed that fears about inflation are receding. Finance chiefs now expect inflation to be 2.9 per cent in a year’s time, down from 3.5 per cent last quarter.

The findings reflect the UK’s positive start to the year so far, with the economy returning to growth in January and business surveys indicating a robust expansion in February and March. However, the survey showed that geopolitics is the most likely factor to disrupt this rosier outlook. It’s the third time in a row that fears about geopolitics have been at the top of CFO’s minds.

Meanwhile, fresh trade figures have shown the UK has become the world’s fourth largest exporter thanks to a boost in services. It comes after the UK ranked seventh in 2021, moving up the table three places in the figures for exporting goods and services in 2022, the United Nations (UN) has confirmed.

According to the latest statistics from the UN Conference on Trade and Development (UNCTAD), which leads on global trade for the UN, the UK has overtaken France, Netherlands and Japan to take fourth position, behind only China, the US and Germany.

Business and trade minister Kemi Badenoch welcomed the news and said: “These new figures show how the UK is punching above its weight on trade, and is on track to reach our ambition of exporting a trillion pounds of goods and services a year by 2030.” The trade news comes thanks to the UK’s strength in services exports, which have grown in recent years to a record high of £470 billion last year. (The writer is our foreign correspondent based in the UK)