Source: This is Money
- UK business outpaced global rivals in strongest growth for nearly a year
- A survey compiled by S&P Global showed private sector activity gathering pace
UK business has enjoyed its strongest growth for nearly a year – outpacing global rivals – in the latest sign that the recession has been left behind.
A closely watched survey compiled by data provider S&P Global showed private sector activity gathering pace this month with the healthiest expansion since last May.
Ashley Webb, the UK economist at Capital Economics, said the report suggests ‘the economic recovery is well underway’.
It came as separate figures from lender Nationwide showed households were starting to splash out more on gardening, eating out, and holidays as cost-of-living pressures eased.
And in the City, the FTSE 100 provided further cheer as it hit a new record high.
UK business has enjoyed its strongest growth for nearly a year – outpacing global rivals – in the latest sign that the recession has been left behind. Pictured: Chancellor of the Exchequer Jeremy Hunt
Pictured the UK financial district. A closely watched survey compiled by data provider S&P Global showed private sector activity gathering pace this month with the healthiest expansion since last May.
But hopes that the economic recovery would help to deliver further relief to hard-pressed households ahead of the election suffered a setback as worse-than-expected borrowing figures reduced Chancellor Jeremy Hunt’s scope to cut taxes.
And in another blow, the Bank of England’s chief economist, Huw Pill, said that there was still ‘a reasonable way to go’ before it could start cutting interest rates.
Britain suffered a recession at the end of last year when the economy shrank for two quarters in a row.
Official figures next month are expected to show it returned to growth in the first three months of 2024, ending the downturn.
S&P’s latest purchasing managers’ index survey suggested the bounce-back extended into April.
It gave a reading of 54, up from 52.8 in March. A reading above 50 signals growth and below 50 points to contraction. The figure put the UK ahead of the US and the eurozone. In Germany and France, the private sector is experiencing little or no growth.
However, there was a stark contrast in the UK between accelerating activity in the dominant services sector –which includes bars and restaurants as well as law and accountancy firms – and manufacturing, which went into reverse.
There were also signs yesterday that the fragile state of the public finances and the ongoing battle against inflation are continuing to hold back progress.
Borrowing – the shortfall between government income and spending – came in at £11.9 billion last month, which was higher than financial markets had expected.
And for the financial year as a whole, ending in March, it totaled £120.7 billion, according to the Office for National Statistics (ONS).
That was £7.6 billion lower than a year ago but £6.6 billion larger than forecast by the Office for Budget Responsibility (OBR), the Government’s tax-and-spending watchdog.
Cara Pacitti, senior economist at think tank the Resolution Foundation, said: ‘There are no signs of any new fiscal wriggle room emerging that might allow the Chancellor to announce another pre-election Budget in the autumn.’
The ONS figures show that the Treasury is raking in record sums in the form of income taxes – up £25 billion to £273 billion for the latest financial year – and corporation tax, which has topped £100 billion for the first time
Yet government receipts still fell £5.3 billion short of the OBR’s forecast.
And public spending surged as inflation pushed up the cost of benefits and goods and services paid for by Whitehall departments.
It all added to the UK’s debt pile, which now stands at £2.69 trillion or 98.3 percent of the size of the whole economy.
Spending on debt interest alone totaled £78.3 billion for the year – equating to £3,600 per household, according to the Institution of Chartered Accountants in England and Wales.
THE AUTHOR: JOHN-PAUL FORD ROJAS ASSOCIATE CITY EDITOR
