Economy gearing up

According to the Confederation of British Industry (CBI) the speed at which the UK economy is growing is increasing, with business activity across all sectors showing a marked increase in the three months to May.

Describing the economy as having “cranked up several gears”, the CBI said that businesses expect the trend to continue and added that recent official figures support the organisation’s belief that weaker-than-expected growth at the start of the year would be short-lived.

Figures from the Office for National Statistics out last week confirmed that growth had slowed to 0.3 per cent in the first quarter of this year, the worst performance since the end of 2012, scotching hope that the figure would be revised upward.

However, according to the CBI’s survey, growth has quickened to its fastest pace for a year in all main sectors of the economy, including manufacturing and retail, and showed a “stand out” performance for business and professional services, which include accountancy, legal and marketing firms.

In fact, marketing services recorded its fastest growth in business volumes since February 2006 and was the main driver of the overall acceleration. The CBI now expects that this sector’s growth will slow, although remain robust, in this quarter but will be made up for by stronger growth in consumer services, including hospitality, retail and manufacturing.

As a spokesman for the organisation said, a stellar increase in activity in the business and professional service sector and retail sales bounding ahead are clear indications of strong business and consumer confidence and increased spending power. He added that UK exports are likely to be helped by renewed momentum in the Euro area but the stronger Pound and weak demand in many overseas markets continue to pose challenges.