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Steady UK growth but pace slackens in 2015

Following strong results in 2014, UK manufacturing and services firms have reported slightly weaker results in exports, domestic markets and investment at the start of 2015.

These are the findings of the latest Quarterly Economic Survey from the British Chambers of Commerce (BCC). The BCC survey polls more than 7,500 responses from firms, who together employ around 850,000 people.

However, although balances are lower in the key areas of export sales and investment, BCC said that quarter-on-quarter trends “support our view that the economy is growing at a steady rate”.

John Longworth, director general of the BCC, said: 

“These figures are a reminder that the path to great, sustainable, long-term growth is bumpy and challenging. As the general election approaches, support for growth must be at the heart of the debate, with a much needed focus on boosting exports and business investment."

The BCC survey found that almost all the national balances for manufacturing and services were weakened in Q1. In manufacturing, domestic balances were down compared to Q4 2014; in services, the domestic balances were also down; and manufacturing export sales fell by 7 points to +19%, while service export sales fell by 1 point to +21%.

The survey also found that both manufacturing and services firms have lowered their investment intentions for training, as well as plant and machinery.

However, these results are not a major cause for concern, said John Longworth. “It is not a huge surprise to see slightly weaker numbers at the start of the year, after a very strong fourth quarter for many firms. Crucially, our survey demonstrates that businesses remain optimistic, though they expect to grow at a slightly slower rate over the coming months.”

However, David Kern, BCC’s chief economist, warned that the recovery remains unbalanced. 

“Growth is still too reliant on consumer spending and the current account deficit remains unsustainable. While a healthy consumer sector is vital for the economy’s wellbeing, much greater efforts are needed to increase the contributions of exports and capital investment to Britain’s growth.”

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