Confidence 'signals recession end'

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Optimism among professionals moved to its highest level for two years in the third quarter, according to research by the Institute of Chartered Accountants in England and Wales (ICAEW).

The confidence measure jumped from minus 28.2 to 4.8, the largest quarterly improvement since the survey began in 2003.

Based on the results of its Business Confidence Monitor (BCM), the organisation now predicts that economic output will rise 0.5% this quarter.

Its forecast comes after a worse-than-expected 0.8% decline in the economy between April and June, marking the UK's fifth successive quarter of recession.

ICAEW chief executive Michael Izza said: "This quarter's BCM suggests that the UK recession is at an end. While there is no doubt that the UK economy is on its way to recovery, we shouldn't underestimate the challenges ahead for businesses."

The survey found businesses expected a rise in 13 out of the survey's 14 key financial performance indicators in the coming 12 months, in contrast to earlier in the year when most were expected to contract.

The research found 41% of senior business professionals were more confident about economic prospects facing their business in the next year. But only 6% were much more confident, indicating a continued level of caution over the timing and speed of the recovery.

IT was the most optimistic sector, followed by banking, finance and insurance firms. The survey found "a remarkable upturn" in confidence in the banking sector in particular, given the impact of the financial crisis on most institutions. Positive signs on the housing market have also helped boost optimism for property firms.

Meanwhile, health and education professionals were least confident as fears of cuts in the public sector grow.