The recession is over: are you confident?

Good news, everyone: Britain is out of recession. Well, sort of.

You see, according to a quarterly survey by the rather pompously-titled Institute of Chartered Accountants in England and Wales (ICAEW), confidence among businesses has shown a record rise this quarter, from -28% to +5%, with 41% of ‘senior business professionals’ saying they are confident about the economic prospects facing them in the next year.

According to this article on the BBC website, the surge ‘suggest[s] the recession is at an end’. But is that actually true? How much can business confidence affect how the economy reacts?

Well, quite a lot. Along with consumer confidence, the collective reactions of business people, who pay close attention to what is going on in their industry, often predict the state of the economy well before anything is confirmed by the numbers.

Business confidence tends to rise or fall in line with the UK’s GDP, although certain industries may be more or less optimistic than others. The property market, for example, still hasn’t recovered from the downturn, while health and education both saw low levels of optimism this quarter due to fears of government spending cuts.

Smarta supposes it all goes to show the power of positive thinking – or at the very least, that there’s safety in numbers. While the UK may not quite be out of the woods yet, the country’s business owners can at the very least afford to have some confidence recession is coming to an end – just as long as their friends think so too.

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