Economic growth ‘up several gears’

The City of London

The speed at which the British economy is growing is increasing, the Confederation of British Industry says.

Research by the CBI suggests business activity increased markedly in the three months to May.

Rain Newton-Smith, the CBI’s director of economics, said growth had “cranked up several gears”.

In April official figures revealed the UK economy grew by 0.3% in the first three months of 2015, which marked the slowest quarterly growth for two years.

BBC business correspondent Joe Lynam said those April figures stoked fears that the country might be set for a slowdown.

‘Stellar increase’

But now the CBI is suggesting that all sectors of the economy are growing.

Its latest survey of more than 800 companies suggests the services sector – which ranges from restaurants and plumbing to banking and finance – stood out in particular.

This sector recorded its fastest growth in business volumes since February 2006 and was the main driver of the overall acceleration, the survey concluded.

The CBI said growth could be boosted further as things improve economically in the Eurozone, which is the UK’s largest trading partner.

Ms Newton-Smith added: “As we move through the second quarter, growth has cranked up several gears and businesses expect that faster pace to continue.

“This supports our belief that the weaker-than-expected GDP growth in the early months of 2015 will be short-lived.

“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.

“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.”

Earlier in the month the CBI urged businesses to “speak out early” in favour of remaining in a reformed European Union.

Its president Sir Mike Rake said there were “no credible alternatives” to EU membership.

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