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Businesses hail brighter UK economy

BBC News BBC News 29/05/2014 BBC News
Brompton bicycle factory, London © Getty Images Brompton bicycle factory, London Brompton bicycle factory, London © Getty Images Brompton bicycle factory, London

Two major business lobby groups, the CBI and the British Chambers of Commerce (BCC), suggest the UK economy is in good health.

The CBI says growth reached a record high in May, marking the best reading since it began gathering data in 2003.

Meanwhile, the BCC upgraded its growth forecast for 2014 from 2.8% to 3.1%, which, if achieved, would be the highest rate since pre-crisis 2007.

That figure is well above the 2.7% forecast by the OBR.

The OBR, or Office for Budget Responsibility, is the government's independent fiscal watchdog.

Strength across the board

The CBI's growth report suggests the UK economy has continued to perform strongly in the second quarter of this year.

It expects the pace of growth to remain firmly above average for the coming quarter as well.

Stronger economic performance was seen across the board, said the CBI.

Sectors including retail sales and professional and consumer services did well in the three months to May.

Manufacturing output also continued to grow at a similar pace to the previous two months.

UK still 'exposed'

Katja Hall, CBI deputy director-general, said the improvement was down to increased confidence in the UK economy, easier access to credit, and better global economic conditions.

However, Ms Hall said there were risks to the UK's outlook from global developments, including the "possibility that the situation in Ukraine and Russia could impact on global commodity prices".

She added: "With the eurozone crisis still far from being fully resolved, the UK continues to be exposed to a prolonged period of subdued activity in the region."

The BCC also said the economic recovery was not guaranteed.

John Longworth, the BCC's director general, said: "Our forecast confirms that Britain is leading, rather than following, other major economies when it comes to short-term growth, which is great news.

"But make no mistake - we still have a lot of work to do."

He added that the UK was "overly reliant on consumer spending" as a driver of growth.

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