High hopes for UK’s economy

THE UK economy maintained a steady pace of expansion in the first quarter of 2015 and looks set to gather momentum in the current period, according to the latest growth indicator from the CBI.

Its figures suggest gross domestic product ( GDP) grew by 0.7 per cent in the January to March period, slightly up from 0.6 per cent in the last quarter of 2014.

But there was a sharp drop in manufacturing export orders and the CBI warned that the strong pound was weighing on already muted foreign trade performance.

Firms were hopeful of a better second quarter though expectations were much lower than they were a year ago, the survey found.

The poll of 764 businesses showed a positive balance of 18 per cent – between firms reporting performance up compared with those saying it was down – in the three months to March.

Distribution businesses strengthened, as did consumer services and travel and leisure firms. But there was weaker growth in manufacturing as well as business and professional services, including accountancy, legal and marketing firms, which felt the strain of tougher competition.

Manufacturing and services expected to see a pick- up ahead, with the overall balance of expectations for growth over the next three months at a positive 25 per cent.

Katja Hall, the CBI’s deputy director general, said: “The outlook for 2015 appears encouraging. The benefits of lower oil prices should be increasingly felt, with cheaper petrol boosting households’ spending power, and cutting costs for many businesses.

“The main risk to the UK economy comes from the eurozone, with continuing wrangling over Greece’s bailout package stoking uncertainty.”