Thames Valley: Post-election bounce helps businesses pull ahead, says BDO

Businesses in the Thames Valley are on course for a summer of success, according to the latest Business Trends Report by accountants and business advisers BDO LLP.

BDO’s Output Index rose to 104.4 this month (up from 104.1 in July), which indicates growth in business activity. Businesses have reacted positively to the political stability after the general election, and increased certainty has encouraged businesses to invest and focus on their long-term prospects. This is particularly true for sectors such as property and financial services which had feared policy change.

Although business optimism is down this month (falling from 103.9 to 103.2) it is still significantly above the long-term trend. This shows that the UK is starting to pull ahead from other global heavyweights in the eurozone and some emerging markets. The dip in optimism this month can be attributed to the export-focused manufacturing sector and its dependence on global markets.

Companies have also benefited from falling commodity prices. Although the BDO Inflation Index tipped into positive territory this month (rising to 95.2 from 94.6), cheaper commodities, especially oil, are keeping business costs down and improving profits.

Commenting on the findings, Simon Brooker, partner and head of BDO LLP in the Thames Valley, said: “Political certainty has bolstered short-term business confidence. The result is a thriving economy, despite global economic unrest.

“However, as business success continues to exceed other markets, the strong pound will make it harder for our exporters – particularly manufacturers – to find customers.  We can’t let confidence tip over into complacency; keeping us competitive should be a government priority.”