UK Economy Continues To Grow

The UK economy saw further growth in the second quarter of this year, according to the latest Economy Survey from the British Chambers of Commerce (BCC).

Employment expectations, investment plans, export orders, and domestic sales, in both the manufacturing and service sectors, made gains in Q2.

Despite the encouraging results, the BCC warns that underlying weaknesses in the economy remain, which cannot be ignored if we are to avoid a relapse into recession. The business group highlights sluggish growth in the service sector as a serious concern, and more specifically, a huge number of manufacturers (around 80%) are now reporting that the cost of raw materials is increasing, adding to price pressures.

The economic data, collected from over 5,600 businesses across every region of the country, is released just two days ahead of the Monetary Policy Committee's July interest rate decision.

Commenting on the results, David Frost, Director General of the BCC, said: "On the whole these results are positive, especially in manufacturing, and they should offer encouragement that the UK's recovery remains on the right track.

"We still have concerns about sluggish growth in the service sector, which emphasises why the government must continue to promote the best possible business environment, in order to help companies invest and grow. Furthermore, with around 80% of manufacturers reporting that they are under pressure to increase prices, there is potentially a big issue bubbling under the surface.

"With very austere times ahead, no one should kid themselves into thinking that the UK’s economic recovery is totally secure. There will need to be an unwavering focus on ensuring business is able to deliver growth, create jobs, and drive a lasting recovery. Interest rates will have to stay low for longer, burdensome new employment red tape must be blocked, and we will have to generate growth across all regions of the country."

(CD/KMcA)