Thursday 22 December 2016

Christmas Boosts A Thumps-Up To The UK Businesses


Businesses are growing at their fastest pace of the year, as strong consumer growth and recovering confidence gives the economy some Christmas cheer.

A survey by the Confederation of British Industry showed that the proportion of firms with rising sales outweighed those with falling sales by a margin of 17 percentage points.

That is up from a net balance of 9pc in November and the index's highest level since December of 2015, indicating that more firms experienced growing demand.

Shopping is on the up as enthusiastic households remain confident in the economy, while export growth is improving because the weak pound makes British goods attractive to foreign buyers.

Britons are happy to make major purchases, according to a separate consumer confidence monitor from GfK, which also showed that households were confident in their personal financial situations.

Some of that household spending growth may fizzle out next year, however, as inflation is expected to pick up due to the fall in the pound.

“Against a backdrop of Brexit negotiations, the decline in the value of sterling, and the prospect of higher inflation impacting purchasing power, we forecast that confidence will be tested by the storm and stress of the year to come,” said Joe Staton, GfK’s head of market dynamics.

Shoppers are aware of the likely rise in inflation, and so could be bringing forward decisions to buy expensive items, getting in now before prices go up in 2017.

The latest study of the economy in the final three months of the year by the Bank of England’s regional agents found that “some households were thought to have brought forward purchases of larger items such as furniture and electrical goods in the expectation that prices would rise next year”.



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