Confidence in economy is highest in 18 months

CONFIDENCE among businesses has soared to an 18-month high as the economy prospers following the Brexit vote.

Research group IHS Markit said its index of future expectations among UK firms – where scores above 50 show increasing levels of optimism about the year ahead – rose from 68.9 in December to 71.1 in January.

That was the strongest score since August 2015 and 11.9 points higher than the low reached in July last year when dire warnings about the impact of the Brexit vote knocked confidence.

Optimism quickly returned and figures last month showed Britain was the fastest growing major economy in the developed world last year – leaving G7 rivals such as the US, Germany and France trailing in its wake.

A senior Bank of England official yesterday said the election of Donald Trump has boosted financial markets around the world – giving the UK economy a lift.

The Bank this week said the economy was set to grow by 2pc again this year – more than double the 0.8pc rate of expansion it forecast in August.

It marked a humiliating U-turn for Bank governor Mark Carney who before the referendum warned that a vote to leave could tip the economy into recession.

IHS Markit said its index of activity across the economy, which takes in builders, manufacturers and services companies, dipped from a 17-month high of 56.5 in December to 55.2 in January.

Chris Williamson, chief business economist at IHS Markit, said the figures ‘still point to a buoyant start to 2017 for the economy’.

Ben Broadbent, the Bank’s deputy governor, said markets ‘have taken a relatively optimistic view so far’ of Trump’s plans to cut taxes and boost infrastructure spending.