Over half (51 per cent) of companies with turnover above £1m feel more optimistic about economic prospects, according to a survey of 304 UK firms conducted between 5 and 20 March by BDRC Continental for Lloyds Bank Wholesale Banking & Markets.
By contrast, only 20 per cent were pessimistic. This is the first time since June last year that more than half the respondents were positive about the UK outlook.
Confidence regarding UK economic prospects surged 30 points to a nine-month high in March. This was bolstered by the less immediate threat of a Greek default. However, there was a marginal fall in businesses’ confidence in their own prospects, with the net balance dropping 1 point to 40 per cent.
The survey suggests that economic activity is picking up and that the chances of the economy returning to positive growth in the second half of 2012 have improved. With sentiment returning to health, output could expand in the first quarter of 2012.
The net balance for employment prospects climbed to 28 per cent from 18 per cent a month ago, the third consecutive monthly increase.
Profit margins also rose, with the net balance improving to -11 per cent from -26 per cent. Similarly, the net balance for average domestic prices fell for the second month in a row to 12 per cent from 15 per cent.
The north of England and the Midlands registered strong rises in this composite index, driven by rises in all four components, and now outperform the south, which saw a slight decline in March on the back of lower trading and employment prospects.
Trevor Williams, chief economist at Lloyds Bank Wholesale Banking & Markets, said: “This month’s acceleration in confidence about UK economic prospects supports our view that concern about the eurozone debt crisis was a major contributor to the sharp decline in sentiment during the latter months of 2011. Indeed, the rebound in confidence mirrors the fallback in market concerns over the potential fallout from a Greek default since December last year. This month’s results also provide strong support to our contention that GDP will expand in 2012H1.”