A new survey conducted by the British Chambers of Commerce (BCC) shows that exports within the services sector have hit an all-time high, indicating that lasting growth is beginning to take root in the UK.
The survey of 5,600 companies shows that those operating within knowledge based areas have seen a 38 per cent increase in international sales and orders since the final quarter of 2013, outperforming pre-recession levels. Accountancy and IT consulting have performed particularly well during this period.
However, the BCC warns that, despite this positive result, the Government must not be complacent and should examine opportunities to increase access to financial and export support rather than simply relying on consumer spending to fuel this growth.
BCC director general, John Longworth, says; “We have witnessed many false dawns during the recovery, and external shocks still loom on the horizon.
“Given that over the next year or so we face political change at home and abroad, long term policies that support our businesses as they look to grow and invest are crucial.”
The survey, which is conducted on a quarterly basis to determine the economic status of the UK, also found that the manufacturing sector has continued to perform strongly in the exports category.
Economists were originally concerned that last year’s initial spurt of international demand would be short lived, but the latest data shows this not the case, resulting in increased employment expectations as well as widespread investment into plants and technology.
This has allowed businesses within the country’s chemical manufacturing industry to thrive, with projected capital investment plans showing 40 per cent intending to increase spending into plants and raw materials, and a further 40 per cent considering an expansion of their operations.
Unsurprisingly, this confidence reflected well in companies’ sales expectations, with half of all participating companies believing sales will increase over the next twelve months.
Yet BCC chief economist David Kern again warned of the dangers of complacency, saying; “The results of our survey suggest that growth is strengthening in the short term, and support our recent forecasts that the economic recovery is moving at a solid pace.
“But challenges persist and despite this progress, the recovery is not yet secure.”
He went on to echo Mr Longworth’s belief that a reliance on consumer spending rather than business support could derail recovery. Although consumer confidence has certainly risen in the past year or so, there is widespread concern that a lot of spending is based on credit rather than borne of a solid financial backing – something which contributed to the financial crisis in the first place.
He concludes; “Given that UK personal debt levels are too high and need to fall, it will be hard to maintain growth levels in the medium term without significant structural changes to our economy.
“Investment and exports must play a larger contribution to our economic future, or else there is a risk that our recovery could stall.”
Do you think the BCC is being slightly over-cautious given the positive results from the latest quarterly economic report?
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