Shares soar as Britain’s recovery gathers speed
BRITAIN continued to make its way out of recession yesterday as share prices hit a 10-month high.
The FTSE 100 Index soared more than 50 points at one stage, breaking the 4900 barrier amid growing optimism over the global upturn.
By the close of trading, the FTSE had dropped back to 4896.23. But shares have now seen their strongest summer rise in 25 years, gaining 40 per cent since March.
In the US, comments from Federal Reserve Chairman Ben Bernanke at the end of last week suggesting the country was on the verge of recovery gave fresh impetus to the latest rally. A larger than expected jump in US homes sales also helped investor optimism.
In Britain, business confidence has risen to its highest level since the financial crisis began, bringing predictions that the global recession is drawing to a close.
Based on the findings of its quarterly Business Confidence Monitor, the Institute of Chartered Accountants in England and Wales now says Gross Domestic Product will rise 0.5 per cent in the third quarter of the year, ending five quarters of decline.
The survey found 41 per cent of businessmen were more confident about their prospects than last year, pushing the BCM into positive territory for the first time since the third quarter of 2007.
Information technology, banking, finance and insurance and property were the most confident sectors.
Michael Izza, chief executive of ICAEW, said: “This suggests that the UK recession is at an end. Policies such as quantitative easing, the fall in interest rates and the VAT reduction have all helped.”
Analysts predicted the FTSE would continue to rise for the next year before seeing falls.
Ben Potter, a research analyst for IG Markets, said Mr Bernanke’s comments and the US housing report had “spurred optimism that the worst is behind us”. He said: “The sub-prime housing market started this whole fiasco now we’re seeing concrete evidence that it is beginning to mend, which is very positive indeed.”
