Businesses feel that there is a valid reason to feel confident this year. Consumers are spending, demand is going up for both products and services in the UK , interest rates look set to stay low for a while yet and inflation is coming down.
I was at a Bank of England Inflation seminar last week and as we discussed the report, a few things struck me.
Exports are still not as good as they should be to give the economy a sense of balance; although unemployment is reducing, there is still a large chunk of under-employment in the economy, people are not working the hours/days they would like to and therefore not increasing the income going into the household: and workplace productivity is not as good as it could be.
I think the Bank is right to leave rates where they are for the present. Businesses are still quite fragile, especially the SME market and those businesses that have the ability to invest, need to do so now; this in turn will create opportunities for other companies in the supply chain of that investment.
Businesses and organisations need to spend this year building the foundations of their growing companies, so that they are ready to accept the increases in interest rates that will come, probably the third quarter of next year.