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Business confidence on the rise
A survey conducted by the accountancy industry body – the ICAEW – has found that business confidence is currently running high.
The Business Confidence Monitor (BCM) reported back from businesses that they have experienced their fastest investment growth since 2008. The banking and construction sector offered the most positive feedback with house builders, in particular, experiencing a notable profit boost, thanks in some part to government initiatives.
Far from being a short-term wave of positivity, the feedback found that businesses are confident that the upturn in turnover and profit is set to continue for the remainder of the year and this confidence should translate to job creation.
January sees growth for Eurozone manufacturing
The Eurozone manufacturing sector has enjoyed a positive start to 2014, with Markit’s Eurozone Manufacturing Purchasing Managers’ Index (PMI) rising to 54 in January. With 50 being the threshold for growth, this is a positive indicator of increased economic activity across the region, and the knock-on effect of the new orders that have been placed is a rise in the employment index – which reached 51 in January.
However, despite the average growth figures there was a discrepancy between individual countries, with France trailing below 50. So the average growth is by no means an indication of Europe-wide manufacturing wellbeing.
Rates unlikely to increase in 2014
UK economists are largely in agreement that interest rates are unlikely to increase in 2014 – with many predicting that the first rise won’t occur until late 2015. The BBC polled 28 economists about various financial predictions and only seven per cent of respondents predicted a rate rise this year. Unemployment was also discussed, and almost half of the economists believe that the rate of unemployment will fall to seven per cent in 2014. When unemployment falls below seven per cent, the Bank of England will consider raising interest rates, so the figure is a significant one.
The economists were also questioned about the Eurozone and there was some uncertainty as to whether the crisis is over – with half of the respondents believing it isn’t over yet and one-third believing the Eurozone economy will grow by less than one per cent this year.
Successful year for services
The service sector accounts for nearly 80 per cent of Britain’s economic output so the fact that it continued to grow in December will be welcome news to those closely watching for signs of economic recovery. In fact, the sector grew every month last year and there are positive signs that the growth trajectory will continue into the new year.
This is backed up by the Markit/CIPS Purchasing Managers’ Index (PMI), which reached 58.8 last month. Although the lowest reading of the past six months, the above-50 score indicates growth and offers a positive outlook for 2014.
David Cameron leads major trade mission to China
UK PM David Cameron has announced he will put his “full political weight” behind a proposed EU-China trade agreement that could be worth £1.8bn to the UK alone. Speaking during this week’s trade mission to China, along with a 120-strong delegation of UK leaders from businesses both large and small, he said:
"Building on the recent launch of EU-China negotiations on investment, and on China's continued commitment to economic reform, I now want to set a new long-term goal of an ambitious and comprehensive EU-China free trade agreement.
"And as I have on the EU-US deal, so I will put my full political weight behind such a deal which could be worth tens of billions of dollars every year."
Chinese Premier Li Keqiang, in a written statement, said the talks had been "highly productive", adding that the UK and China had become "indispensible partners for each other's development".
"On infrastructure, the two sides have agreed to push for breakthroughs and progress in co-operation on our enterprises in nuclear power and high-speed railway," he continued.
Mr Cameron says eliminating the highest sector tariffs, such as vehicles, pharmaceuticals and electrical goods, could save UK exporters £600m a year.
Santander’s Breakthrough programme is helping Britain’s fastest-growing SMEs achieve global business ambitions through funding, financial advice, round tables and live events. Breakthrough international trade missions give groups of UK businesses unique opportunities to meet and forge links with potential global partners. Its second Women in Business trade mission to New York took place on 10 November. For more information on trade missions see here.
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