UK businesses report strong growth in fourth quarterTuesday 07 January 2014 09.52
British businesses reported strong growth and rising confidence in the fourth quarter of 2013, suggesting the country's economic recovery will pick up speed, a new survey shows.
The British Chambers of Commerce said its quarterly economic survey indicated the overall economy grew by around 0.9% in the three months from October to December, faster than 0.8% in the third quarter.
Domestic sales and orders among firms in the dominant services sector jumped at the fastest rate in over nine years and their export sales and orders were the highest since 1989.
Although manufacturers' domestic sales and export orders readings dipped slightly, they reported the joint highest level of confidence since 1989 that their profitability would rise in the year ahead and investment intentions grew.
"With most key balances in this quarter higher than their pre-recession levels in 2007, it is clear that the UK recovery is likely to continue to strengthen in the short term," said David Kern, chief economist at the BCC.
The BCC survey - the UK's largest private-sector business poll - also showed British employers were looking to speed up hiring, with a balance of 27% of service firms and 31% of manufacturers planning to increase headcount in the next three months.
Employment statistics are being closed monitored by the Bank of England which pledged in August to keep interest rates at record lows at least until unemployment falls to 7%.
With unemployment falling sharply to 7.4% in recent months, the Bank has been quick to stress that its 7% threshold is not an automatic trigger for a rate hike.
But the BCC warned today that headwinds to the recovery remain. "The euro zone's basic problems have not yet been resolved, which could adversely impact our exporters, and inflation remains a major concern," Kern said.
In a sign of potential inflationary pressures, a growing number of firms told the BCC they were looking to raise prices, with manufacturers citing higher raw material costs and services companies greater financial costs and overheads.
The BCC surveyed almost 6,000 service firms and over 2,000 manufacturers between November 11 and December 2 for its poll.