The Confederation of British Industry (CBI) expects the growth of the UK’s gross domestic product (GDP) to gather pace in 2014 and 2015.
The third quarter’s better than expected growth has seen the growth forecast rise to 1.4% – 0.2% higher than in the August forecast.
Current estimates set 2014’s GDP growth at 2.4%, rising to 2.6% in 2015.
Director General of the CBI John Cridland noted: “The recovery that started in the service sector has fanned out to manufacturing and construction.”
However, he later cautioned “The recovery won’t be spectacular, but appears more solid and better-rooted.”
CBI’s Director of Economics Stephen Gifford added that consumer spending is set to rise, underpinned by three main factors: Increased confidence, better credit conditions and a slow recovery in incomes.
The investment also rises
This growth is in line with a record growth in optimism amongst small to medium sized manufacturing firms – also reported by CBI in its SME Trends Survey.
Attributed to the improving demand and output in the industry, the rise saw exports grow by the fastest rate witnessed since 2011 – with domestic orders not witnessing a faster rate since 1995.
“Optimism about the general business situation has improved and is now at a record high,” noted Gifford, and “there is evidence of a general thaw in investment intentions” for 2014.
The survey revealed the firms’ primary investment plans centring on increased spending on buildings, machinery, plants and training.
“Job creation strongest in nearly 13 years”
A further report from Lloyds Commercial Banking reported underlying economic conditions are improving throughout the UK as business activity rose in all nine of England’s regions last month.
Lloyds’ Regional Purchasing Managers Index also noted job creation was the strongest in nearly 13 years.
Whilst London and the South-east saw the biggest increase in private sector employment, the general trend indicates a broad recovery across both manufacturing and service sectors.
Therefore whilst companies remain under pressure, experts are hopeful for a steadily improving picture over the coming years.