Britain has stepped back from the precipice of a triple-dip recession five months ago to an economy some would lead us to believe is about to ‘take off’. The turnaround in sentiment has been palpable.

Then, just as momentum was building, ‘the Fed’ spooked those of a nervous financial disposition by indicating the ‘morphine’ it is injecting into the US economy may be rationed. Fragile confidence was jolted. So what could this all mean for the UK food industry and its supermarkets?

We see companies sweating assets harder to boost productivity

First of all, Britain not only avoided a triple-dip recession but GDP estimates have been pencilled up. Business confidence, which started to rise in the bleak mid-winter, continued to do so throughout spring. Confidence is the pre-condition to investment investment the pre-condition of greater economic activity greater economic activity is the driver of longer working hours, more jobs and rising household spending.

We have been encouraged by the rise in activity levels by purchasing managers and the increase in GfK NOP consumer confidence to minus 21 in June, up from circa minus 27 to minus 32 over the past year or so.

What’s more, this better economic data is coming through at a time when banks are still repairing balance sheets, government expenditure levels are being managed down and the consumer is avoiding ‘never-never’ land - so it is arguably pretty high-quality economic growth. In such conditions, we see companies sweating their existing assets harder to increase productivity rather than take more folk on - so incomes may rise more through overtime and bonuses. But will this money go to supermarkets?

Justin King recently said that all boats float in a rising tide, which is true. But we believe many households will continue to cut food waste, so it is not a given that volumes will spike. Inflation may ease with a big northern harvest and that could give some households more money to trade up although many will still feel the pinch.

So we see non-food and the affordable treats as the categories more likely to benefit from better economic times, if they come. But the supermarkets may need a high tide to feel it.

Dr Clive Black is head of research at Shore Capital Stockbrokers