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April 2, 2013 12:02 am
Britain’s businesses are feeling more confident after a broad improvement in trading conditions, according to two separate surveys, easing concerns that the economy is heading for its third recession in five years.
The 7,300 respondents to the British Chambers of Commerce’s quarterly survey, more than 90 per cent of which have fewer than 200 employees, reported rising exports and domestic sales in the first quarter of this year.
The survey data were not consistent with an economy in recession, the BCC said.
“The improvement seen in most key balances in the first quarter supports our view that UK output continued to grow in the early months of 2013,” said David Kern, the BCC’s chief economist. “The survey reinforces our assessment that recent [official] gross domestic product figures . . . have exaggerated the weakness of the UK economy and the volatility in output.”
Separately, a survey by Lloyds Bank of about 200 companies found they were feeling more confident about the economy in March than they were at the start of the year.
The two surveys come two days before the Bank of England’s Monetary Policy Committee votes on whether to pump more stimulus into the economy. For the past two months, Sir Mervyn King, the central bank’s governor, has pushed for more gilt purchases to try to support economic growth, known as quantitative easing, but he has been outvoted by his committee.
Economists expect the MPC to hold fire again on Thursday even though the economy shrank 0.3 per cent in the final quarter of last year. Inflation remains stubbornly above the BoE’s 2 per cent target and the latest official data show the service sector regained a little momentum in January.
Although the BCC’s survey responses showed business conditions were generally still much weaker than before the financial crisis, there were some bright spots: service sector companies reported their best collective export performance since 1994, for example. The sector, which accounts for more than three-quarters of the British economy, also reported its best domestic sales and orders since early 2008.
Positive signs also emerged in manufacturing, which has been struggling over the past 18 months as growth has slowed globally. Manufacturers in the BCC survey reported their best domestic sales since the second quarter of 2011 and their best exports since the second quarter of 2010.
The number of manufacturers planning to increase their investment in plant and machinery also crept a little higher to the best level since the first quarter of 2012.
John Longworth, the head of the BCC, said the survey provided “a glimpse of the as-yet-distant sunlit uplands of recovery” and called on the government to act quickly on its Budget plans to improve the supply capacity of the economy.
“It is clear from our survey that any growth this year will be slow and steady, and it is important that this does not veer off course,” he said.
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