Businesses predict pace of growth will pick up
THE UK’s economic recovery looks set to accelerate further this year, although lack of funding for businesses could hold back potential growth, the British Chambers of Commerce (BCC) said today.
The organisation’s latest quarterly report provided fresh evidence that the UK is growing at a solid pace and will probably strengthen further in the short term.
And further positive signs were provided by the latest Institute of Directors business confidence survey which found three-quarters of respondents predicting higher sales in 2014 and almost half expecting higher employment.
But a note of caution was sounded by the latest Markit/CIPS purchasing managers’ index (PMI) which came in below expectations.
The BCC expects the fourth quarter will have seen GDP growth of 0.9 per cent and said most key indicators for the economy were now better than pre-recession levels in 2007.
In manufacturing, domestic orders, employment and confidence for turnover and profitability are at all-time highs, allaying fears that a third quarter growth spurt was only temporary.
However, domestic sales and export orders in the sector fell back, though they remained high by historical standards.
BCC director general John Longworth said: “Firms across the board believe they can create jobs, invest and export. But businesses have major ambitions and to be able to meet them more support must be provided.
“We must give companies the opportunity to get the finance they need to go out and trade in the world if we are to succeed in rebalancing the economy.”
Liz Cameron, chief executive of Scottish Chambers of Commerce, which will publish its quarterly confidence survey next week, said early indicators suggested that 2014 could be the year when the economic recovery is cemented.
“There is every reason for optimism, but nothing can be taken for granted and businesses will require continued attention and support from our governments at a Scottish and UK level,” she said.
Figures also out yesterday showed that growth in the dominant services sector slipped to a six-month low as the pace of economic recovery slowed in December, amid predictions that it will ease off over the year to come. The reading of 58.8 in the closely-watched PMI survey was below expectations, though still well ahead of the 50 level that separates growth from contraction.
It was the second monthly fall in the index of the services sector – which represents three-quarters of the economy and has led the UK out of recession.
The slowdown mirrors trends in manufacturing and construction, which also lost momentum during December compared to very strong performances in previous months.
It left the average PMI across all three sectors at a five-month low of 59.5.