CBI Growth Indicator reveals that the pace of economic growth in the UK increased over the summer, with strong expectations for the next quarter. The survey across the manufacturing, retail and service sectors showed significant growth with the output volumes standing at +31 per cent in August, the best rate since last May.
Recent turmoil in China, a major contributor to economic growth for more than two decades, has significantly affected the global economy, hitting business confidence across the world. In the UK, direct exports to China account for less than 5 per cent of Britain’s total exports, and if this is to stop, the effect of reduced Chinese demand would be rather small. One City economist commented: “China remains an unpredictable element, but is still not a likely game-changer for the UK recovery.”
According to the Confederation of British Industry (CBI), the UK economy has remained solid in the second half of the year. The strength of growth has been broad-based across the sectors, with the business & professional services and retail sectors making particularly large contributions. Household spending has been steady this year, contributing to a considerable increase in sales volumes, encouraging retailers to hire more people. Likewise, both the Business & Professional Services and Consumer Services sectors saw the strongest employment growth since 2003.
What is more, the Office for National Statistics confirmed that the UK economy bounced back in the second quarter, with gross domestic product growing by 0.7 up from 0.4 per cent in the first quarter. Rain Newton-Smith, director of economics at CBI, said “The weather may have been a washout this month but the sun has certainly been shining on the British economy. The pace of growth has been energised across the sectors and it is good news that this is set to continue as we head into the autumn. “
Although global economic worries have recently intensified, the pace of UK economic growth has remained stable. In a major speech at King’s College London to mark the CBI’s 50th anniversary, John Cridland, Director-General of the CBI, confirmed that the UK economy is growing strongly and rebalancing healthily, however, planning for future and understanding the global financial environment is vital for business success in order to maximise new export markets and secure future investments.