The UK economy is inspiring greater levels of confidence among experts and forecasters amidst an increase in activity. According to the Confederation of British Industry (CBI), the three months leading up to May saw the economy represented a period in which the economy “cranked up several gears,” suggesting that the slow activity seen in the first quarter of this year was only temporary.
Just a couple of weeks ago, it was widely reported that the UK economy had significantly slowed over the first three months of the year. According to official figures, the first quarter of 2015 saw the lowest rate of growth experienced by the country’s economy for more than two years. Overall, the economy expanded by a mere 0.3% over the quarter. However, this weakening of economic growth has been suggested to be a temporary blip rather than a new norm, partly on account of a growing trade deficit. The new figures which show a sharp uptake in economic activity over the most recent three months of the year are being taken as a sign that this view is correct and that things are already turning around once again.
According to the CBI, it was the services sector – a significant force in the UK’s overall economy – which led this trend of accelleration over the last three months. In particular the professional services sector, including things like legal work and accountancy services, accounted for a significant amount of growth.
811 businesses have been polled by the CBI to gather their views on the situation, and it is reported that the general sentiment among them is one of optimism and confidence in the current and future state of the economy. The poll also showed that a majority of businesses had experienced growth as opposed to decline in the three months to May. This led to an overall positive balance of 33% compared to just 19% in the three months leading up to April – the most robust expansion figures of the past year.
According to the CBI’s director of economics, Rain Newton-Smith, “As we move through the second quarter, growth has cranked up several gears and businesses expect that faster pace to continue.” Newton-Smith went on to say that the figures also support the idea that the trend seen in the first quarter of the year will not be a prolonged one.
Newton-Smith also pointed to the role of inflation in providing a boost to household incomes in real terms. She said: “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.”