The service sector has been singled out as the main driver behind a mild improvement in the British economy over the last quarter.
The British Chambers of Commerce’s (BCC) Quarterly Economic Survey shows that the economy has made progress, but adds that there are still some mountains to climb before it is fully back on track.
Comprising responses from more than 7,000 businesses, the new survey shows strong export balances in the service sector, with deliveries and orders near the all-time high in 1994.
Most key balances in the manufacturing sector have also strengthened in the first quarter of the year, with business confidence and investment up, and cash flow is now positive for both manufacturing and service sector businesses, despite remaining relatively weak.
With most indicators still below their pre-recession levels of 2007, the findings suggest the economic outlook will improve gradually, and that growth will be positive but subdued this year.
The BCC said the results also demonstrate resilience among UK businesses, many of whom are confident and looking to invest and increase exports this year.
John Longworth, director general of the BCC, said: “We should not be satisfied with a long and tortuous road to recovery. These results provide a glimpse of the as-yet-distant sunlit uplands of recovery.
“Businesses up and down the country are working hard to drive the economy, create jobs and export, but they cannot accelerate this process alone.
David Kern, BCC chief economist, added: “The survey reinforces our assessment that recent GDP figures published by the ONS have exaggerated the weakness of the UK economy and the volatility in output.
“If an announcement of negative growth in Q1 is misleadingly described as a triple-dip recession, confidence will again be damaged unnecessarily.
“The surge in the service sector’s export balances suggests that pessimism over UK exports is unjustified. However the UK is increasingly becoming a largely service sector economy, and developing the export potential of the service sector is critical to our future long-term prosperity.”
Either way, we can’t help but feel that it will be a while yet before we can start to feel truly positive about the economy, and that feeling probably extends to our many SMEs and entrepreneurs too.