Economic Growth Reached A New High In May, According To The CBI

Economic growth reached a high point in May - the best reading from the Confederation of British Industry (CBI) since records began in 2003.

A survey published by the body, which asked 726 businesses about their confidence, financial wellbeing and order books, found that most companies are performing extremely well.

Overall, the score given to retail and service sector growth was +35 per cent, up from +25 per cent in April.

The CBI's economic barometer is considered a key indicator of how the UK will perform in the gross domestic productivity release from the Office for National Statistics, although positive and negative movements are exaggerated compared to official figures.

Manufacturing also performed well, with output continuing to grow at the same pace as the previous two months.

Katja Hall, CBI deputy director-general, praised the UK economy's performance, attributing it to rising business and consumer confidence, improving global economic conditions and better credit availability.

"What's encouraging is that growth is becoming more broad-based, with solid increases in business investment over the past year. This bodes well for the year ahead," she added.

However, Ms Hall sounded a note of caution, explaining that the political crisis in Eastern Europe could hurt economic recovery in the UK.

"There are risks to the UK's outlook from global developments, including the possibility that the situation in Ukraine and Russia could impact on global commodity prices," she stated.

But while violence in the east of Ukraine continues to worsen, many political analysts believe the Kremlin is stepping back from the brink and wishes to end the crisis because of the financial damage of sanctions from western nations, as well as reduced oil and gas income in recent months.

The CBI's growth forecast is the latest in a steady stream of good economic news for the UK, leading most experts to believe the nation has now begun to fully emerge from the prolonged recessionary period.

Expert Opinion

These positive results reflect very well on the manufacturing and SME sectors and are welcome news for the economy. <br/> <br/>“Small and medium sized enterprises are the engine room of the UK economy and it is vital that as these businesses maximise their opportunities and tap into the growing demand that exists here and overseas. <br/> <br/>“Getting access to finance is an essential ingredient, but as growing businesses develop, they need to be ready for new challenges. For example, they might now require new premises, undertake a recruitment drive, or face an increase in the number of disputes from customers or suppliers. These issues need to be dealt with effectively and it is vital that ambitious SMEs choose a legal partner that can tackle these issues and generate a positive outcome.” <br/> Steven Beahan - Partner