UK growth dispels crunch fears as weak pound fuels exports
UK ECONOMIC growth is bucking fears of an inflation-driven crunch on household spending, as global growth and the weak pound fuel a British export boom.
The proportion of companies reporting growth in the three months to September outweighed those reporting a fall in output by a margin of 11pc, a sur- vey from the Confederation of British Industry (CBI) has shown.
The figure is down a touch on the 14pc reported in August – but remains above its long-run average of 5pc.
Companies also expect to keep growing in the near future, as the net balance predicting growth in the coming three months edged up from 16pc to 18pc. This too is better than the average score of 10pc. However, there are few signs of momentum improving and the CBI said it wants the Government to set out more plans to boost productivity and growth,
“Growth in the economy has held steady through the summer, although at a slightly slower pace than expected by many firms. While we saw growth in most sectors, consumer-facing businesses are having a tougher time of it as inflation tightens purse strings a little more,” said the CBI’S chief economist Rain Newton-smith. “As we head to the Conservative Party conference, businesses will want to know that the Government is not allowing the domestic agenda to be put on the back-burner. Firms want to see plans set out to raise productivity across the country, by delivering on a modern industrial strategy, raising spending on innovation and improving educational attainment.”
Theresa May spoke last week to set out a defence of capitalism, in the face of a socialist onslaught from Jeremy Corbyn at the Labour Party’s annual conference.
The Prime Minister said the industrial strategy “will help business invest in the latest technologies, turn local areas of excellence into national export champions, and support the skills and innovation we need to succeed in the industries of the future”. She added that new T-levels – technical qualifications – will help close the skills shortage afflicting some industries. But the business group is clear that it wants more action towards these goals as a matter of urgency.
The steady growth seen in the CBI survey will also reinforce expectations of a Bank of England interest rate hike in November. Mark Carney, the Bank’s Governor, has said that if the economy continues on its current track then it might be necessary to raise interest rates.
“We are talking about just easing a bit off the accelerator to keep with the speed limit of the economy,” he said on Friday.