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UK business confidence 'improving'

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image captionConfidence is up, but questions over the economy remain

Confidence among UK businesses is continuing to improve, a survey suggests, despite slow growth in the economy.

The quarterly Business Confidence Monitor, released by a professional body for accountants, says confidence is at its highest level since 2010.

It also forecasts stronger economic growth in the second quarter.

Official estimates suggest the economy grew by 0.3% in the first three months of the year.

The accountants' trade body, ICAEW, and business advisory firm Grant Thornton said improved business confidence would boost the economy further, and they forecast growth of 0.6% in the second quarter.

"There is a gradual improvement in the economy and the recovery is starting to stand on more solid ground," said Michael Izza, chief executive of ICAEW.

"We should not be complacent though. There is still a degree of fragility and the economy is susceptible to knock-backs from events outside the UK."

Business confidence stood at its highest level since the third quarter of 2010.

Confidence was up across all sectors, and in all parts of the country, the survey indicated.

image captionThe IMF has questioned George Osborne's austerity plans

But the survey also found that plans for growth in business investment remained weak.

Consumer spending also remains under pressure, due in part to the fall in real-term earnings over the last year as wage increases stagnate and prices continue to rise.

The findings come despite recent questioning of the government's economic policies.

Last month senior figures in the International Monetary Fund (IMF) called on the Chancellor George Osborne to reconsider the pace of the government's austerity programme in the face of slower-than-expected growth.

An IMF delegation is due to arrive in the UK later this week for talks with the government, where the Treasury is expected to defend its policies.

The talks are part of the IMF's annual review of the UK economy, and will involve meetings with the Treasury, the Bank of England, the Office for Budget Responsibility, and independent economists.

The recent growth in the economy, and the avoidance of a triple-dip recession, is widely seen to have strengthened the chancellor's case for austerity.

He has also announced an expansion of the Bank of England's Funding for Lending Scheme (FLS) in an effort to boost growth in recent weeks.

But the IMF is still widely expected to outline policy recommendations that favour growth over tackling the budget deficit, fearing that the speed and depth of cuts is preventing growth.

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