UK growth dis­pels crunch fears as weak pound fu­els ex­ports

The Sunday Telegraph - Money & Business - - Business - By Tim Wal­lace

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.

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