According to the Confederation of British Industry (CBI), businesses in the UK grew at the fastest rate in more than two years in the three months to February, with the organisation’s survey showing +20 in February, up from +9 in January and reaching its highest level since December 2015.
In fact, growth was far above the long-run average across most sectors with the exception of retail, which saw volumes decline for a fifth straight month in February and both Toys R Us and Maplin seeking creditor protection.
Almost all British industries are growing at a faster pace than normal, with factories enjoying strong domestic and foreign orders, business and professional services companies expanding at the fastest pace since mid-2015, and consumer services firms also accelerating.
Looking ahead, the CBI expects the pace of growth to edge higher to +24 over the three months to May, which they say will be underpinned by a pick-up in retail and robust growth across all other sub-sectors.
However, during this year and next, the CBI expects conditions to remain challenging for consumer-facing companies and retailers, with higher inflation and weak wage growth squeezing household budgets. However, manufacturers should continue to benefit from the lower level of Sterling and the improving global economic environment.
Unfortunately, the recent big freeze could put a dent in this forecast, at least in the short term. Economists believe that the adverse weather conditions could be a “disaster” for the high street as people could not get out.
As one commentator said, the snow and the floods would have likely had an effect on construction businesses and shops, as well as supply chains of big businesses, restaurants and the travel sector. However, he added that “it is important to remember that much of the lost activity will eventually be recouped”.