- UK businesses overtook global rivals for biggest growth in almost a year
- A survey compiled by S&P Global showed private sector activity accelerating
UK businesses have enjoyed their biggest growth in almost a year, outstripping global rivals, in the latest sign that the recession is behind us.
A closely watched survey by data provider S&P Global showed private sector activity accelerated this month with the healthiest expansion since last May.
Ashley Webb, British economist at Capital Economics, said the report suggests “the economic recovery is underway.”
It came as separate figures from lender Nationwide showed households were starting to spend more on gardening, eating out and holidays as cost of living pressures eased.
And in the City, the FTSE 100 brought more joy as it hit a new record.
UK businesses have enjoyed their biggest growth in almost a year, outstripping global rivals, in the latest sign that the recession is behind us. Pictured: Chancellor of the Exchequer Jeremy Hunt
A closely watched survey compiled by data provider S&P Global showed private sector activity accelerated this month with the healthiest expansion since last May (pictured: City of London).
But hopes that the economic recovery would help deliver further relief to struggling households before the election suffered a blow when worse-than-expected borrowing figures reduced Chancellor Jeremy Hunt’s scope to cut taxes.
And in another blow, Bank of England chief economist Huw Pill said there was still “a reasonable way to go” before it could start cutting interest rates.
Britain suffered a recession late last year when the economy shrank for two consecutive quarters.
Official figures next month are expected to show it returned to growth in the first three months of 2024, ending the recession.
The latest S&P Purchasing Managers’ Index survey suggested the recovery extended into April.
It gave a reading of 54, up from 52.8 in March. A reading above 50 points indicates growth and below 50 points, contraction. The figure puts the United Kingdom ahead of the United States and the eurozone. In Germany and France, the private sector is experiencing little or no growth.
However, there was a stark contrast in the UK between the acceleration of activity in the dominant services sector – which includes bars and restaurants, as well as law and accounting firms – and manufacturing, which retreated.
And there were also signs yesterday that the fragile state of public finances and the ongoing battle against inflation continue to hold back progress.
Borrowing (the shortfall between government revenue and spending) rose to £11.9 billion last month, higher than financial markets expected.
And for the financial year as a whole, which ended in March, it amounted to £120.7 billion, according to the Office for National Statistics (ONS).
This was £7.6 billion less than a year ago, but £6.6 billion more than forecast by the Office for Budget Responsibility (OBR), the Government’s tax and spending watchdog.
Cara Pacitti, chief economist at the Resolution Foundation think tank, said: “There are no signs that any new fiscal room for maneuver is emerging that could allow the Chancellor to announce another pre-election budget in the autumn.”
ONS figures show the Treasury is raising record sums in the form of income tax (up £25bn to £273bn in the last financial year) and corporation tax, which has surpassed £100 billion for the first time.
However, government revenue was still £5.3bn short of OBR forecasts.
And public spending increased as inflation raised the cost of benefits and goods and services paid for by Whitehall departments.
All of this contributed to increasing the UK’s debt, which now stands at £2.69 trillion or 98.3 per cent of the size of the entire economy.
Spending on debt interest alone amounted to £78.3 billion over the year, equivalent to £3,600 per household, according to the Institution of Chartered Accountants in England and Wales.
