UK economy finished year strong, CBI says

Reuters, LONDON

Tue, Jan 05, 2016 - Page 15

Growth in Britain’s private sector picked up speed in the three months to last month and companies think the momentum is likely carry on into early this year, a leading employers group said, suggesting a recent slowing of the economy might be easing.

The Confederation of British Industry (CBI) on Monday said its monthly growth indicator — based on surveys of manufacturers, retailers and services — rose to a three-month high of plus 20 from plus 13 in November and was above a long-run average of plus 5.

“The UK economy has finished the year strongly, with business services acting as a lightning rod for growth,” CBI director-general Carolyn Fairbairn said.

“Nonetheless, there is no room for complacency in 2016 as significant challenges to global growth remain,” she said.

A separate survey of chief financial officers of large British companies, conducted by accountants Deloitte, showed business confidence fell back to levels last seen in 2012.

Growth in business services offset a slight fall in manufacturing in the three months to last month, the CBI said.

The slowdown in the international economy and the strength in sterling have hampered British exports, leaving the recovery reliant on consumers who have been helped by a combination of low inflation, near rock-bottom interest rates and rising wages.

Britain’s economy has outpaced many of its peers in the developed world over the past couple of years, but growth slowed to 0.4 percent in the third quarter, according to unexpectedly weak official figures published last month. This year as a whole, growth is likely to have slowed to around 2.2 percent, down from 2.9 percent in 2014.

The Bank of England has said it expected the economy to grow by 0.6 percent in the fourth quarter of this year. It is watching for signs of stronger wage growth before moving towards its first interest rate hike since before the financial crisis.

The CBI survey found output expectations for the next three months rose to plus 20 last month from plus 17 in November.

Some economists have warned that uncertainty over Britain’s planned referendum on its membership of the EU could hurt growth This year. British Prime Minister David Cameron has said he expects to hold the referendum within the next two years.