Corporate profitability in the fourth quarter of 2006 was the highest since records began 18 years ago, official data reveals.
The net rate of return by companies in the final three months of last year was 15.5 per cent, the Office for National Statistics (ONS) said, up from 15.2 per cent in the previous quarter and 14.3 per cent in 2005.
Service companies enjoyed profitability levels of 20.9 per cent, while those in the manufacturing sector also experienced a rise in net rate of return of ten per cent.
But oil and gas companies saw their returns weaken by 3.8 percentage points to 33.5 per cent on the back of lower oil prices.
Howard Archer, chief UK and European economist at Global Insight, commented that the figures amounted to an "impressive performance" by British business.
"Firms were generally able to keep their overall costs down by limiting wage increases, while sustained healthy economic activity through 2006 lifted demand and boosted companies' pricing power," he explained.
"Record net rates of return in the fourth quarter of 2006 reinforce hopes that business investment will be able to extend the substantially improved performance seen in 2006, and make a sustained, major contribution to growth.
"Robust investment is also vital for boosting productivity," Mr Archer concluded.
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