By Daily Mail Reporter
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The UK’s prospects have improved, a survey shows, but the eurozone crisis has cast a shadow over longer-term growth prospects.
Prospects: The UK's long-term growth is going to be affected by the eurozone crisis
BDO’s Output Index, which reflects the current experience of those in UK business and predicts GDP one quarter ahead, climbed to 96.7 in May from 95.8 in April.
This suggests that the UK will experience growth from the middle of 2012.
Conversely, BDO’s Optimism Index has dropped for the third consecutive month, from a peak of 98.0 in February to 95.5 in May.
It found that UK businesses expect growth to tail off later in 2012.
The Bank of England resisted calls to boost the economy last week when it chose not to extend the £325billion quantitative easing scheme.
There had been increasing pressure for the monetary policy committee to act after a run of poor economic data that has suggested the UK would struggle to climb out of recession in the second quarter of 2012.
The most recent £50billion injection took place in February and economists said the nine-strong committee would have 'seriously considered' additional QE this time round.
However, the run of poor data was interrupted last week when a PMI survey showed activity in the services sector grew at the same pace in May as in April, defying expectations of a slowdown in growth.
The survey index was 53.3 in May, unchanged from April, with a reading above 50 indicating growth.
Services account for some 74 per cent of UK gross domestic product and their performance is the biggest contributor to the UK economy. The huge sector takes in everything from hairdressers to restaurants and banks.Â
As well as an overall increase in business activity, services companies reported rising levels of new business and expectations for the coming year were marginally positive, with 50 per cent of survey respondents positive that business would improve in the peri od.
The service sector survey showed input prices (the price companies pay for raw materials) and output prices (the amount they charge their customers) falling. Service companies said that clients were pushing for discounts, and that competition for new business remained fierce given the uncertain economic climate.
The falls will raise hopes that households could see further falls in living costs. The official consumer price index measure of inflation fell to 3 per cent this month, its lowest level for two years.
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The Eurozone politicians and bureaucrats have managed to get EVERYTHING wrong right from the incecption of the euro. They insisted from day one that they knew what they were doing; and that putting several carts before the horse would be perfectly fine. Anyone who dared to point out the faults in their plan was derided. These europhiles are so blinded by a desire for power that they cannot be trusted to lead Europe out of the mess they have created. Britain should be looking to re-negotiate the treaties it has with the incompetent and power hungry EU.
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Wake up!,taxation is so overwhelming that there is not any prospects of growth.
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No - things are really bad. The EU doesn't allow us to draw up trade agreements outside the EU. But it is outside the EU where economies are growing - that's where we should be doing business.
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