Britain is one of the fastest growing major economies, with official figures from the Office for National Statistic (ONS) showing a jump in business investment, construction and manufacturing in the first quarter of the year.
The ONS report said the economy had grown by 0.8%, pushing the annual growth rate above 3% and well above those of the eurozone and the US.
Analysing these statistics, the Centre for Economics and Business Research (CEBR) has found that increased business investment is driving GDP growth.
John Hawksworth, PwC’s chief economist, said that although business investment estimates were “highly provisional at this stage”, they indicated five consecutive quarters of positive growth.
“Business investment still remains 17% below its pre-recession peak in Q1 2008, so there’s still a long way to go before these losses are made up.
“The upward trend is encouraging, however, and has also been supported by a 12% rise in housing investment over the same period. Although total GDP is still 0.6% below its pre-crisis peak at the start if 2008, non-oil output is now 0.3% higher. This is a better measure of the underlying state of the economy as it excludes the volatile, and generally weak, contribution of North Sea oil and gas production.”
Lee Hopley, chief economist at EEF, the manufacturers’ organisation, said an improvement in the export sector also holds the key for the economy’s long-term health.
“We have now seen five consecutive quarters of business investment growth which, while very encouraging, is still only part of the rebalancing story as net trade is still doing nothing for the overall growth picture.
“If, however, the very strong export indicators seen in recent business surveys are a sign of things to come, we should finally start to see some clear signs that rebalancing is under way in the coming quarters.”
Photo by David Pacey