New research from the Bank of England has shown that Britain’s businesses are feeling more confident and are planning to invest more in the months ahead.
According to the Bank’s most recent Agents’ Summary of Business Conditions, investment in research and development, renewable energy and automation is likely to increase later this year, despite fears about Brexit.
The Bank’s latest study also shows that manufacturing firms in particular are keener to splurge now than at any point since late 2015, while service companies are more upbeat than they were a month before the EU referendum.
The Bank says that extra demand from domestic and international customers had driven up turnover and that high profile examples, such as Toyota’s £240 million investment in its Derbyshire plant, had given the market more confidence.
Official data, referenced within the research, indicates that factory output is at an 18-month high, while the export market is expanding at its fastest pace since 2014.
In fact, the fall in sterling has been a key factor behind some businesses’ recent success according to agents from the Bank, as the weak pound makes UK goods cheaper for foreign buyers and has encouraged more foreign visitors to come to the UK on holiday.
However, the fall in the value of sterling had led to imported goods costing more, which placed additional pressure on businesses budgets and had hampered domestic consumer spending.
The latest data shows that inflation rose by 2.3 per cent in the 12 months to February, outstripping the 2.2 per cent increase in average wages. This has led economists to worry that this could reduce consumer spending growth.