Belated Happy New Year – Yes it’s already March! As the spring slowly approaches, it seems that there is some positivity is in the air with many businesses looking forward to a successful year ahead.
News shows that we have had a drop in unemployment, but this is not currently leading to a rise in interest rates, as the Bank of England awaits more investment from business.
Mark Carney, Governor of the Bank of England, has proclaimed that there will be no change to interest rates in the near future, despite previous expectations.
The initial guide set out for interest rates indicated that an increase could be considered if unemployment rates fell to 7%. This level has now been reached, despite predictions that it would not happen until 2016, prompting Mr Carney to speak out. The current Bank of England interest rate is likely to remain at 0.5% for the foreseeable future. ‘It’s part of the reason why we’re trying to provide as much clarity to business,’ Mr Carney said. ‘The path of monetary policy is going to be calibrated very carefully to ensure that only when we see sustainable growth in jobs, in incomes and in spending, will we make adjustments’.
Martin Weale, a policy maker for the Bank of England’s Monetary Policy Committee, recently commented that ‘the most likely path’ would be an interest rate rise in the spring of 2015.
Meanwhile, numerous sources have shown there is increased faith in the economy, with business groups and think tanks all displaying higher levels of confidence and more determination to succeed.
In a survey of retail chairmen, including Tesco, Sainsbury’s and Marks & Spencer, carried out by Headhunting organisation Korn Ferry, 73% of those questioned said they are optimistic about the UK’s economic outlook. This reaction is significantly different from the same survey last year, in which only 15% of those questioned were optimistic.
In a similar survey, the Forum of Private Business (FPB) found that 85% of its members were positive about 2014 and intended to develop their businesses in the coming year. The main challenges facing small businesses were cited as time, expertise and money – despite better access to finance. The cost of doing business remains a key concern, with 46% of members claiming that business rates continue to be a difficulty, coupled with the rising cost of utilities.
The findings came as the National Institute of Economic and Social Research (NIESR) announced that it expects the UK economy to grow by 2.5% in 2014, adding that the economic recovery was now ‘entrenched’.
With these improved figures, the UK recovery is finally taking a turn for the better and the Government has outlined its intention to reform business rates to ensure that the tax paid is ‘in line with the state of the economy.’
With the 2014 Budget in just over 2 weeks (Wednesday 19 March), we are waiting to see what new measures will be listed by the Chancellor. I will be tweeting ‘@adjbusiness’ throughout with important bits so follow me for the up-to-date information that is relevant to you.