Bullish businesses unruffled by election uncertainty

By Anita Jaynes on February 9, 2015

New data published today reveals that businesses are unruffled by the prospect of an upcoming election, despite the current high profile debate around businesses’ confidence in political parties.

According to the latest Business Trends report from Bristol-based accountants and business advisers BDO LLP, business optimism and output still remain high despite the most unpredictable election in a generation being only three months away.

Both the BDO Output and Optimism Indices, predicting economic growth three and six months ahead respectively, remain resolutely positive. The BDO Optimism Index maintained a robust reading at 104.4 and the BDO Output Index continued positively at 102.9, both well above the 100 mark representing expansion above the long-term trend rate.

Companies’ hiring intentions also remain positive. The BDO Employment Index, measuring expected employment growth, remained well above its long term trend at 111.6, signalling that firms expect businesses to keep hiring in the near term.

Continued low oil prices, low inflation, strengthening wage growth and the potential for increased consumer spending have created an economic thaw for the economy. Confidence is particularly evident in the manufacturing sector which – responding positively to low input prices – maintained a balmy economic outlook.

Commenting on the findings, Andrea Bishop, audit partner and head of BDO LLP in Bristol, said: “This month’s report shows that businesses can and will tune out of the parties’ electioneering to focus on what really matters – their business prospects. By discounting the political noise and taking a realistic view of the economy’s strengths, businesses are remaining cautiously optimistic.

“Businesses are worried less about the detail of which candidate will get the keys to Number Ten and more about the country’s long-term economic prospects. In the meantime they are focusing on their own businesses and keeping rightly positive.”

Overview of the BDO indices:
An overview of all four indices is provided in the table below, detailing figures for the last three months and the same month of the previous year, to allow for comparison.

January 2015
(figures for this report)
December 2014 November 2014 January 2014

(equivalent report last year)

BDO Optimism Index 104.4 104.9 103.9 103.8
BDO Output Index 102.9 103.3 103.2 102.3
BDO Inflation Index 95.1 95.4 95.8 97.9
BDO Employment Index 111.6 113.8 113.9 101.3

Pictured above: Andrea Bishop, audit partner and head of BDO LLP in Bristol