Steady growth for UK economy despite ‘obstacles’, says BCC
The UK economy is growing at a “steady rate” despite pockets of performance at pre-recession levels, according to the British Chambers of Commerce.
Its quarterly economic survey showed manufacturing exports held static in the first quarter of the year at a balance of plus 23%, the same as average pre-recession levels in 2007.
The report also found that business confidence among firms in the service industry was at a lower level than before the financial crisis, as was the intention to raise prices over the coming year in both sectors.
The survey said low pricing intentions by firms reinforced its view that the Bank of England should not raise interest rates until at least early 2016.
The survey, based on 7,500 firms employing 850,000 staff, said almost all first quarter national indicators fell compared to a strong final quarter last year, showing “that manufacturing and services firms reported slightly weaker growth for the start of 2015”.
The survey said its first quarter readings were weaker in “key areas” such as export sales and investment, which are crucial to rebalancing of the economy away from its reliance on consumer spending.
However, the report said the quarter-on-quarter trends of both the final three months of last year and the first quarter of this year point towards the economy growing at a steady rate in 2015.
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BCC director general John Longworth said: “Our conclusions are by no means a cause for alarm, but they are a salutary reminder that the UK still faces obstacles on the path to sustainable, long-term growth.
“Unless support for exports and business investment is placed at the heart of any future government, consumption and government spending will continue to drive an economic recovery that is unbalanced and unsustainable.”
Last month official figures from the Office for National Statistics showed the annual current account deficit widening to a record level while separate monthly data revealed a slowdown in the UK’s dominant services sector in January.
BCC chief economist David Kern said: “The UK recovery remains unbalanced - growth is still too reliant on consumer spending and the current account deficit remains unsustainable.”
He added: “While a healthy consumer sector is vital for the economy’s wellbeing, much greater efforts are needed to increase the contributions of exports and capital investment to Britain’s growth.”