Britain’s recovery hopes have been given a fresh boost with businesses reporting the fastest growth in output in ten years.
The CBI poll of more than 600 firms across a range of sectors was published yesterday as official figures showed the UK economy becoming less reliant on consumer spending after a surge in business investment.
Katja Hall, chief policy director at the CBI, said the recovery was “gaining real momentum” as the business group’s latest “growth indicator” also flagged a further rise in output over the next three months.
Output volumes in the three months to February grew at their fastest since the CBI began keeping records in late 2003. Consumer spending and a turnaround in the housing market have been the main drivers behind the surprisingly robust recovery, which began last year.
But yesterday’s figures from the Office for National Statistics (ONS) suggest a more balanced recovery may be building, to the relief of coalition ministers and the Bank of England.
The ONS data revealed business investment rose by 2.4 per cent quarter-on-quarter in the final three months of 2013, while upward revisions to previous estimates mean it has also increased for four quarters in a row for the first time since 2007.
The figures were released alongside the second estimate of gross domestic product (GDP) for the fourth quarter of 2013, revealing that growth remained unchanged on last month’s projection at 0.7 per cent.
Samuel Tombs, UK economist at consultancy Capital Economics, said: “The second estimate of fourth-quarter GDP provides further reassurance that the economic recovery is becoming better balanced and is therefore sustainable.”
Howard Archer, chief UK and European economist at IHS Global Insight, the forecasting consultancy, sounded a note of caution, saying: “While the UK economy’s performance in 2013 was well above expectations and encouraging, it needs to be borne in mind that the improvement has come from a low base.
“Even after overall growth of 1.8 per cent in 2013, the economy is still 1.4 per cent below the peak level seen in the first quarter of 2008.”
The CBI’s survey of 639 companies across manufacturing, retail and services showed output growth was broad-based. Firms were described as being “extremely optimistic” about the outlook for expansion in the coming quarter.
Hall said: “The recovery is gaining real momentum with growth in output volumes at the highest since our records began and growth broad-based across manufacturing, retail and service sectors.
“The surge in confidence among firms for the next quarter suggests the recovery will continue to gain traction.
“Looking ahead, strengthening global growth and supportive monetary policy should continue to bolster a broadening and deepening UK recovery.”