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UK business activity strengthened in April as companies frontloaded operations amid concerns over long-term disruption, according to the latest research from accountancy firm BDO.
The BDO output index, which measures economic activity, rose to 99.64 in April, up from 96.74 in March and representing the highest reading in 16 months.
Both manufacturing and services sectors contributed to the increase. New orders were supported by stronger domestic and foreign demand, though analysts suggest the uplift may reflect temporary stockpiling ahead of anticipated volatility.
The Bank of England expects GDP growth of just 0.9% across 2026. This figure sits well below the long-term trend, suggesting the April output spike may not be sustained.
Business confidence improved modestly as the optimism index rose to 92.37. The bounce followed short-term relief from the US – Iran ceasefire, but the index remains in contractionary territory for the 18th consecutive month.
Cost pressures continued to build as the BDO inflation index reached 101.36, its highest level since June 2023. This was driven by a sharp rise in input costs and global price volatility.
Labour market conditions weakened as the employment index fell to a 15-year low of 93.08. The index, which tracks hiring intentions and labour demand, has remained in negative territory for 16 months.
Head of strategy at BDO Scott Knight said: “April’s uptick is welcome but shouldn’t be mistaken for long-term recovery. With the levels of inflation and geopolitical upheaval we’re seeing, it’s no wonder businesses are hunkering down and stockpiling resources. Until cost pressures ease and global markets calm down, meaningful growth is unlikely.”
