Having exited out of recession strongly last Friday, the UK economy appears to have turned the corner after a tough couple of years.
The latest Business Trends report, released by accounting and business advisory firm BDO this morning, shows that output rose last month to its highest level in almost two years.
BDO reports that UK business output and confidence rose in April, as the inflation pressures that have dogged firms for months ease.
This upturn has pushed up BDO’s output index by 2.09 points to 103.92 in April – the highest level since May 2022.
The UK’s services sector led the bounceback in April, says BDO, thanks to consumers having more money to spend at hospitality, retail and leisure companies as energy bills fall.
Hopes of a cut to UK interest rates by the autumn helped lift business confidence. Last week, Bank of England governor Andrew Bailey said it was “likely” that Bank rate will be cut over the coming quarters, after the BoE left rates on hold again.
Worryingly, though, BDO’s employment index fell for the 10th month running, to its lowest level since February 2013, suggesting the UK jobs market is cooling.
The latest regional PMI survey data from NatWest confirms that business activity continued to rise across almost all UK nations and regions last month.
London saw the fastest growth, followed by the West Midlands and Northern Ireland.
Yorkshire & Humber was the only area where activity fell.
Steve Webb is concerned that 42% of new mortgages agreed in the fourth quarter of 2023 - or 91,394 - had terms going beyond the state pension age. That’s up from 31% in the last quarter of 2021.
Many of those loans are being taken out by 30- to 39-year-olds, who would typically be expected to be taking out their first mortgage, or those in their 40s.
Demand for such long loans has increased following the rise in mortgage rates; taking out a longer loan lowers the monthly repayment cost (even though the total interest bill may end up higher).
The agenda • 10am BST: China’s current account for Q1 2024 • 1pm BST: India’s inflation report for April • 3pm BST: Eurozone finance ministers meet for Eurogroup meeting
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