The Institute of Chartered Accountants in England and Wales (ICAEW) and Grant Thornton Llp have reported that in the past three months business confidence has improved here in the UK, offering the hope that the country will return to positive GDP growth in the second quarter.

The confidence index they measure by has reached its highest level since Q2 in 2011.  From this data they believe that the technical recession the UK is currently in will revert to quarter on quarter positive growth of 0.6% in Q2 2012.  Having said that, they caution that any recovery is ‘fragile’ and that the UK economy may well ‘zigzag’ throughout the remainder of 2012.

At the same time, the Confederation of British Industry (CBI) has also reported an improvement in business sentiment, particularly in small and medium-sized companies (SME). This group have expressed optimism over their order books, which should in turn lead to an increase in production activity.

Their latest quarterly small and medium-sized enterprise trends survey reported a balance of +22% out of the 356 respondents being more optimistic about their business opportunities. The majority also saw a chance to increase both investment and employment.  However, they also reported concern around the current general economic situation.  This was reflected in the fact that they saw a chance for the political and economic situation to perhaps limit overall export demand.

The Chair of the CBI’s SME council, Lucy Armstrong, commenting on these findings said:

Small and medium-sized manufacturers are feeling more optimistic for the first time this year – an encouraging development given the important role that they play in our economy.

Indeed, firms expect orders and output to rise strongly in the coming quarter and plan to invest more in the year ahead, pointing to growing momentum in manufacturing activity.”

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