London - XINHUA
The first major British business survey of 2014 released Tuesday reveals that the growing economic recovery of 2013 is likely to continue into 2014, possibly with greater strength.
The British Chamber of Commerce's (BCC) Quarterly Economic Survey suggests that growth will continue and probably strengthen further in the short term.
The survey, the first major economic indicator of the year, was taken in the final quarter of 2013, which is expected to be as strong for growth as the rest of 2013.
Most Q4 key balances are higher than their pre-recession levels in 2007, and both services export balances, and employment in the sector, are at all time highs for the survey.
On the basis of these results, the BCC believes GDP growth in Q4 2013 could be 0.9 percent.
The survey, made up of responses from nearly 8,000 businesses, shows improvements in most areas for both the manufacturing and service sectors, and that all key balances are stronger than their long-term historical averages.
In the manufacturing sector, five key balances are at all time highs, and exports in the services sector continue to break new ground.
Suren Thiru, UK economist with BCC, told Xinhua, "The economy is improving, and the improvement is broad-based."
"Business has been fairly confident and resilient over the past few years, remarkable in light of economic headwinds and we are seeing improvements now in the economy as a result of this as confidence improves," he said.
Thiru said that the BCC was now forecasting growth of 2.7 percent for 2014 (long-term trend growth is about 2-2.5 percent), which would be the fastest growth for seven years.
The source of that growth is the UK consumer and their spending and the boost given by the buoyant housing, Thiru explained.
2015 would see a slight slowdown from this high rate of growth, as consumer spending slows a little with rising household debt.
"That is a challenge for UK economy, for businesses and for policymakers," he said.
Thiru said it was important to see a rebalancing of the economy towards exports and investment.
"Our survey shows there is a huge potential for exports, particularly to new markets, but we need more help from government -- access to finance, and practical support for export business, which is lacking compared with competitor nations like Germany," said Thiru.
Success here would make the growth base larger than in the past, and move growth off the shoulders of the consumer.
Exports have suffered over the past three years because of the underlying weakness in the eurozone, which is likely to still have an effect in the coming couple of years, said Thiru.
If British businesses could find new markets in developing economies, that would provide a new avenue of growth, said Thiru.
The BCC survey shows that the service sector has hit record highs for sales and orders, export sales (+36 percent), and export orders (+33 percent).
Employment is also rising in the services sector with the sector balance at +29 percent, an all-time high for the survey, which could indicate that the Bank of England(BOE)'s threshold for reviewing a bank rate rise, 7 percent unemployment, could be hit earlier than the central bank forecasts at present.
Manufacturing is a small but important sector of the economy, about 7 percent, but contributes greatly to exports and balance of trade and is important within British regions.
Thiru said the manufacturing sector was performing well with five key manufacturing balances are at all-time highs -- domestic orders (+35 percent), employment (+33 percent), employment expectations (+31 percent), turnover confidence (+67 percent), and profitability confidence (+51 percent).
The construction sector was also performing well, though it was recovering after a serious recession after the financial crisis and still had ground to make up before it approached pre-crisis peak, said Thiru.