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UK economy 'to hit 2008 peak by summer'

The UK economy will exceed its pre-recession peak by the summer, according to upgraded forecasts from a leading business lobby group today.

File photo of money as the BCC says UK economy 'to hit 2008 peak by summer'. Credit: PA Wire

The British Chambers of Commerce now believes the UK will grow by 2.8% this year and that the second quarter will see gross domestic product climb back to the level seen in the first quarter of 2008.

A year ago amid a much gloomier picture for the economy, the BCC predicted the pre-recession peak would not be reached until 2016, although a number of revisions brought this forward to the third quarter of 2014 in December.

More: Economy growth for Q4 of 2013 unchanged at 0.7%

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Weak pound boosts demand for UK exports

The pound has fallen against the dollar and euro this year. Credit: PA

The ONS said service sector output increased by 0.8% in January on a year earlier and was up 0.3% month-on-month, despite the snow impact at the start of the year.

It is hoped that this solid performance will offset woes in the construction and manufacturing sectors.

Increased demand for exports has been helping, boosted by the recent weakness of the pound, which makes it cheaper to buy British goods and services.

The BCC's survey showed improvements in both the manufacturing and services sectors, although employment had weakened.

BCC: ONS has 'exaggerated' economic weakness

David Kern, British Chambers of Commerce chief economist, said the results suggested the economy continued to grow in the first three months of 2013.

He added:

The survey reinforces our assessment that recent gross domestic product (GDP) figures published by the Office for National Statistics (ONS) have exaggerated the weakness of the UK economy and the volatility in output.

If an announcement of negative growth in the first quarter is misleadingly described as a triple-dip recession, confidence will again be damaged unnecessarily.

He admitted the survey showed the UK's economic performance was still "inadequate", but confirms areas of strength.

UK will avoid triple dip, says business group

Britain's services sector will save the country from another recession, according to the BCC. Credit: PA

Britain will avoid a triple dip recession thanks to near record levels of exports from the powerhouse services sector, a business group said today.

The latest economic survey from the British Chambers of Commerce (BCC) revealed export deliveries and orders from the services sector - which accounts for more than three quarters of UK economic output - rose close to the all-time highs seen in 1994 during the first three months of 2013.

Its survey of more than 7,000 firms also found that business confidence had grown, while firms were looking to invest more in their businesses.

GDP figures could signal another period of recession

The GDP figures for the last three months of 2012 will be released this morning and could show that the UK has entered another period of recession.

The economy is officially in recession if the figures show that GDP - the amount of goods and services produced by the UK - has contracted for a second quarter in a row.

Read: What is a recession?

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Slow British manufacturing output sparks fears of triple-dip recesssion

Fears Britain is heading for a triple-dip recession have been fuelled by figures showing manufacturing output shrinking unexpectedly in November.

Factory output fell 0.3% month-on-month on the back of a 1.3% decline in October, the Office for National Statistics (ONS) said.

Manufacturing output was reduced in November.
Manufacturing output was reduced in November. Credit: Danny Lawson/PA Wire/Press Association Images

The wider measure of industrial production edged up 0.3% but was below forecasts for a 0.8% rise.

The numbers add to a recent flow of disappointing economic data, stoking concerns of a fresh contraction in the fourth quarter and that the UK economy could be on the verge of recession again if activity remains under pressure in the first quarter of the year.

Spanish recession prompts Catalans to seek independence

The pain of recession in Spain has persuaded the people of its Catalan region to edge ever closer to independence.

Elections for its local Parliament gave almost two-thirds of the seats to parties who want a referendum on breaking away.

Catalonia in northeastern Spain has a population of 7.5 million and includes Barcelona, Spain's second biggest city.

Catalonia also produces 20 percent of Spain's GDP and its economy matches Portugal's.

From Barcelona, our Europe Editor James Mates reports.

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