Firms optimistic about economy in 2024

Based on a quarterly survey of 404 senior executives at middle market companies conducted from 2 to 20 October, it also found that 80% of businesses expect turnover to improve in 2024. However, 69% also said they expect to raise prices in the first half of next year.  

Turning to the third quarter of this year, 48% of middle market firms said the economy has improved, while 26% said they reduced prices during the quarter – the most since the start of the pandemic. In contrast, 35% of businesses said profits were down this quarter.

Its latest Middle Market Business Index, meanwhile, fell to 141.5 in the fourth quarter after the high of 146.5 the previous quarter. The weakening in the index comes from 39% of firms saying the economy has worsened in this quarter, plus 34% who said there had been a slowdown in revenue and 35% confirmed a decrease in profit.  

RSM UK economist Thomas Pugh: “A rebound in consumer spending as households’ real incomes are given a boost by strong wage growth; lower inflation; and big cost-of-living payments to low-income households, should bring back growth in the start of the fourth quarter.  

“This optimism is reflected in the latest data and suggests that we should narrowly avoid falling into recession, but it wouldn’t take much to tip the UK into a second quarter of contraction. However, any economic malaise should be brief.   

“Admittedly, the UK economy is walking a tightrope to avoid a recession next year. The impact of the huge surge in interest rates on households and businesses and a significant reduction in government spending will weigh heavily on growth.

 
“The resurgence of household incomes should help, but middle market businesses will be hoping the chancellor will have growth front and centre in the Autumn Budget to ensure the UK economy, not only revives, but thrives in 2024.”