UK economic confidence improves in February
UK economic confidence continued to improve in February as business and consumer spirits rose amid less short-term political turmoil, a European Commission survey showed.
The commission's economic sentiment survey reported a UK score of 95.5 for February – up from 90.7 in January. 100 represents the average score from 1990 to 2018.
The survey provides a snapshot of British economic sentiment before a separate UK report due on Friday. The figures show a second month of improvement after sentiment declined sharply during 2019.
Uncertainty amid political paralysis over Brexit caused jitters for households and businesses but the Conservatives' decisive election victory, allowing Brexit to take place on 31 January, has bolstered the short-term mood.
The UK still faces significant hurdles to negotiate a business-friendly Brexit by the end of 2020 and Prime Minister Boris Johnson on Thursday threatened to walk out of talks with the EU. Fears are also increasing about the potential effect of the COVID-19 coronavirus on the world economy.
Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said: "Both business and consumer confidence continued to recover in the first half of February, though it remains to be seen what damage the more recent spread of the coronavirus will inflict on sentiment."
Tombs said the commission's figures were consistent with UK economic growth exceeding the Bank of England's 1% estimate of potential supply growth and consumer confidence at an 18-month high.
"This suggests that the MPC likely will keep Bank rate on hold this year, provided that the COVID-19 outbreak does not spiral out of control and significantly disrupt the economy," Tombs said.