UK pessimists ‘are in retreat’

PESSIMISM about the economy is ‘in retreat’ as business confidence returns and mortgage lending bounces back.

In an upbeat survey published today, the Institute of Directors (IOD) said its economic confidence index is at its highest level since May last year.

Bosses in Britain are calling on the Bank of england to cut interest rates from the current 16-year-high of 5.25pc to turbocharge the recovery.

They are likely to be disappointed next week, however, with the Bank set to leave rates unchanged until later in the year.

The call for rate cuts came as separate figures from the Bank showed lenders approved 61,325 mortgages in March, up from 60,497 in February and the highest total since September 2022.

however, it is feared that further delays to cut rates could derail the recovery in the property market as well as the wider economy.

lenders including Nationwide, Santander and Natwest have raised mortgage rates in recent days, dealing a blow to households hoping for cheaper loans. roger Barker, director of policy at the IOD, said: ‘It remains the case that business leaders are, on balance, pessimistic about UK economic prospects.

‘however, since March, the pessimists have been in retreat. Confidence has been edging upwards and is now within striking distance of a more neutral perspective.

‘however, a significant obstacle to improved business confidence is the current high level of UK interest rates.’ he added: ‘Business leaders will be looking for a significant shift in the monetary stance of the Bank of england before they are able to buy into a rosier economic outlook.’

Peter Arnold, chief economist at consultants EY UK, said: ‘ The recovery in mortgage demand continued in March.

‘ however, the increase in mortgage interest rates over recent months appears to have taken some of the momentum out of the recovery.’