Business confidence has climbed to its highest level in four years, but the recovery will be at risk without clear plans to address the public finances, it has been claimed.
According to the Business Trends Survey conducted by accountants BDO, optimism and output have reached pre-recession levels.
The optimism index in the survey, which polled 11,000 small business owners, climbed from 99.4 to 103.2 in March. This is the highest level since the summer of 2006.
Output expectations have also increased to the highest level since the third quarter of 2007.
BDO attributed the rise in output to companies re-stocking after running down inventory levels during the recession.
However BDO warned that this recovery would be short-lived without firm plans from the main political parties on how they will control public borrowing.
Alex White, a partner at BDO, said a sustainable recovery depended on an increase in the level of business investment, but warned that companies would be reluctant to make investment decisions amid economic uncertainty.
“The economy is showing signs of improvement, but the main political parties risk frittering this opportunity away if they don’t provide clarity for businesses now,” he said.
“The knock-on effect of uncertainty in each area of the public sector is enormous. Uncertainty created here is an enemy to investment.”
© Crimson Business Ltd. 2010