UK growth looks set to be fastest in the West

Britain’s economy is poised to grow at the fastest rate of any nation in the western world, as business confidence reaches a 10-year high, according to the findings of an influential survey commissioned by the Institute of Chartered Accountants for England and Wales.

The findings of the survey will provide more vindication for Chancellor George Osborne ahead of the upcoming Autumn Statement, which is due to be delivered on December 4. Despite growing evidence that the economic recovery has picked up sustained momentum Mr Osborne remains adament that there won’t be a pot of money for tax giveaways in the budget update.

Strong demand in the construction sector and signs that businesses will increase investment spending along with a much needed Christmas boost to jobs could see the economy grow by 1.3pc in the fourth quarter, accelerating from 0.8pc in the previous three-month period, according to the UK Business Confidence Monitor (BCM) index.

The BCM index, compiled by Grant Thornton and the Institute of Chartered Accountants for England and Wales (ICAEW), reached a 10-year high of 31.7 points, up from 24 points in the third quarter. Established in in 2003, the survey of 1,000 accountants is one of the broadest leading indicators of how the economy is expected to perform.

“This quarter’s report shows that the UK economic recovery is well underway,” said Michael Izza, chief executive of the ICAEW. “If it continues at this rate, the UK economy will be one of the fastest growing economies in the western world going into 2014.”

Businesses have reported the strongest expected employment growth since the financial crisis with an increase of 1.7 per cent in headcount forecast. But growth in salaries should remain sluggish at just 1.8 per cent over the coming year, reports The Telegraph.

The survey said there were tentative signs of a more broad based recovery across both business and consumers despite the continued weak growth in wages holding back household spending.

“This is a positive sign even if modest salary rises remain below inflation,” said Mr Izza.

The index shows that business is expecting another year of strong financial performance. Profits are forecast to grow by 4.7pc in the next year, up from 3.5pc in the comparable period.

“Reassuringly, confidence has increased across all three main industry sectors – Construction, Production Industries and Services – as the recovery becomes more broad based,” said Scott Barnes, chief executive of Grant Thornton UK.

The construction and property sectors have both seen particularly high confidence this quarter. The mood in the property sector has increased sharply and is well ahead of the UK average, which is a reflection of the ‘Help to Buy’ scheme and soaring house prices in the South East.

The pace of Britain’s recovery in recent months has taken forecasters by surprise, with the BCM index the latest survey showing that the economy is defying expectations.