UK busi­nesses re­port stronger ac­tiv­ity

Kuwait Times - - BUSINESS -

LON­DON: Bri­tish busi­nesses re­ported stronger ac­tiv­ity in the three months to Oc­to­ber af­ter an ini­tial slow­down fol­low­ing June’s vote to leave the Euro­pean Union, the Con­fed­er­a­tion of Bri­tish In­dus­try said yes­ter­day. The CBI said its monthly growth in­di­ca­tor - which is based on sur­veys of how com­pa­nies’ out­put has changed over the pre­vi­ous three months - rose to +8 in Oc­to­ber from a six-month low of +3 in Septem­ber.

“Man­u­fac­tur­ing ex­ports are rid­ing high on the back of weaker ster­ling and con­sumers are con­tin­u­ing to spend on the high street, but ac­tiv­ity is more mod­est in the ser­vices sec­tor,” CBI chief econ­o­mist Rain New­ton-Smith said. How­ever the CBI said there were likely to be tougher times ahead, as un­cer­tainty about the terms on which Bri­tain would leave the EU had led to a “sharp de­te­ri­o­ra­tion” in planned in­vest­ment.

“Al­though growth will be ro­bust for the re­main­der of this year, we ex­pect un­cer­tainty ... to dampen busi­ness in­vest­ment in 2017, along with a rise in in­fla­tion which will knock house­hold spend­ing,” New­ton-Smith said. The for­ward-look­ing com­po­nent of the CBI growth sur­vey fell to +13 in Oc­to­ber from a one-year high of +22 in Septem­ber, though this was still above its long-run av­er­age.

Last week the CBI said it ex­pected growth to slow to 1.3 per­cent next year from 2.0 per­cent in 2016, and to 1.1 per­cent in 2019.

This is a slightly darker out­look than the Bank of Eng­land, which re­vised up its 2017 growth fore­cast last week on the back of a fall in ster­ling and un­ex­pect­edly strong growth of 0.5 per­cent in the three months to Septem­ber. The CBI growth in­di­ca­tor is based on a com­bi­na­tion of its sur­veys of man­u­fac­tur­ers, re­tail and dis­tri­bu­tion com­pa­nies and busi­ness and pro­fes­sional ser­vices firms, which it says cov­ers about three quar­ters of the pri­vate-sec­tor econ­omy.

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