Markit: UK businesses upbeat about 2015 despite worries about May election

Despite jitters over the outcome of the general election due in May and the impact of the stronger pound on the recovery, UK companies are looking forward to a buoyant 2015, said Markit.

The upbeat view in Britain contrasts with much of the world – with the exception of the eurozone, where a growing number of firms that expect this year to be better than the last.

“The UK’s remarkable run of strong growth therefore looks set to continue, with firms largely brushing aside worries about the euro crisis, Russia, the possibility of higher interest rates and uncertainty due to the upcoming general election.”

The response of British companies was outstanding given that the global economy faces many risks and the general election in May could add to domestic uncertainty, according to Chris Williamson, the chief economist at Markit.

He comments: “It’s looking good for the UK now that major export markets in the eurozone are feeling in better shape, especially Ireland. But there are risks in the global economy and some countries, like Brazil and Russia in a dire situation, with both unlikely to avoid recession.”

Williamson cautions that looking at the survey in its broadest terms, the global measure of sentiment found that companies were the least optimistic than at any time since 2009, pushed down by a waning outlook in the US.

On a large scale, the proportion of companies expecting activity to be higher in a year’s time exceeds those expecting a decline is +27%. But this net balance is down from 28% last October and 40% a year ago.

Optimism in the service sector hit to its lowest level since the survey was first conducted in 2009, while manufacturing optimism remained “well below par”.

The jittery outlook also hit job creation, with hiring intentions down to a new survey low. Investment intentions only picked up modestly from October’s level.

A more equal distribution of global growth is what the poll emphasizes. While expectations about business activity fell in the fast-growing US and UK economies, prospects have improved in the eurozone, Japan and China. UK businesses could be proved to be overly optimistic if the US economy slows too quickly, as America is the global economy’s main growth engine.