Survey shows recession at an end

The Institute of Chartered Accountants' index of business confidence showed a reading of 4.8 at the end of June, rising from -28.2 three months earlier. The startling improvement is the biggest increase for two years and provides further evidence that recession in the UK is at an end.

The survey covers over 1,000 accountants in England and Wales, 41 per cent of whom were more confident about business prospects over the next 12 months. Sectors including IT, banking and insurance have seen a remarkable turnaround in confidence in the period, leading the institute to forecast positive GDP growth of 0.5 per cent in the current quarter after a 0.8 per cent decline in the previous quarter.

However chief executive Michael Izza sounded a note of caution, warning that: "While there is no doubt that the UK economy is on its way to recovery, we shouldn't underestimate the challenges ahead for businesses." Whereas more than 40 per cent of professionals were "more confident" in the outlook, only six per cent were "much more confident" in the future.

In a separate survey the Confederation of British Industry said that the service sector, which accounts for more than two thirds of the UK economy, has stabilised.

WHAT THEY ARE SAYING:Anatole Kaletsky in the Times: "This recession has, contrary to general expectations, been only slightly worse than previous US downturns, while in continental Europe and Japan it has been a genuinely unprecedented disaster. Hence history may be a better guide to the shape of the recovery in America than in Europe and Japan. Britain’s experience may lie somewhere between."

Economist Nouriel Roubini, in the London Evening Standard: "If policymakers take large fiscal deficits seriously and raise taxes, cut spending and mop up excess liquidity soon, they would undermine recovery and tip the economy back into stagdeflation. But if they maintain large budget deficits, bond-market vigilantes will punish policymakers. Then, inflationary expectations will increase, long-term government bond yields would rise and borrowing rates will go up sharply, leading to stagflation." ·