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Report predicts economic recovery will gather speed

By North Devon Journal  |  Posted: January 09, 2014

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A REPORT by South-West based BDO LLP indicates that business confidence has increased for the 10th consecutive month and that the economic recovery will gather speed in the first half of 2014.

BDO's Optimism Index, which predicts business performance two quarters ahead, increased from 101.7 in October to a 43-month high of 103.1 in November, taking it comfortably above the 100.0 mark that indicates the economy's long-run average growth rate. Increased business confidence is taking hold across the economy, with optimism in the services and manufacturing sectors both above the crucial 100.0 mark for the first time since April 2010, providing evidence that the recovery is broad based.

The BDO Inflation Index dropped from 100.5 in October to 99.7 in December – below the all-important 100.0 mark that indicates inflation's long-term trend.

"This is a strong and broad-based recovery," said Graham Randall, partner and head of BDO LLP in the South West. I think we can finally say that the key economic battleground has shifted from austerity to the new debate about how the Government can help businesses achieve sustained growth in the context of a dynamic, internationally competitive economy.

"We clearly have some substantial long-term problems in terms of an under performing education system and a dysfunctional planning regime. Planning seems to have been filed in the 'too difficult' box by successive governments, so real change is unlikely anytime soon. Just as importantly, there still remains a very strong case that we need to spend more on infrastructure, particularly on updating our tired, expensive and increasingly life-expired energy industry. If the Government can at least partly crack these issues, the economy has a chance of getting back to good levels of sustained long-term growth."

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