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Business optimism in the US is particularly strong at 80%

As the economy heads into the second quarter, business optimism in the UK has fallen to a four-year low of 20% from a prior estimate of 26%, according to the latest Grant Thornton International Business Report. In contrast, global business optimism has soared to a record high of 49% during the same period.

The downturn in UK optimism could be partially explained by the report's finding that concern over skilled staff shortages has reached a two-and-a-half year high of 33%. The problem is particularly pronounced in the UK due to its tight labour market.

Francesca Lagerberg, global leader for tax services at Grant Thornton, said: "We may finally be seeing the crunch point in countries like the UK, where unemployment has reached its lowest level in decades but where fewer businesses are expecting to offer above-inflation pay rises – especially since the mid-market is generally regarded as the driving force behind job growth."

Despite the looming uncertainty due to elections in Germany and France, member countries of the European Union have greatly contributed to the rise in global optimism, with a total estimate of 39% from a previous figure of 34%.

The US reported a particularly robust optimism level of 80% for the first quarter of 2017, far surpassing the previous estimate of 54% for the fourth quarter of 2016.

The surge has been attributed to President Donald Trump's pro-business stance, the Fed's further tightening of monetary policy, and a rebound in oil prices.

"As the world's largest economy, US business confidence sends a shot of endorphins throughout the global market. It's encouraging, therefore, to see that close neighbours and countries with strong trade links are also riding a new wave of hope," Lagerberg added.

"But clearly US businesses are not yet seeing or expecting this to result in bottom line change over the short term. Businesses await follow through on promises relating to spending, de-regulation and tax cuts, while stock markets continue to react to daily policy developments."

The quarterly global survey covered 2,400 businesses in 36 economies.