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CBI survey shows firms positive for 2015

Growing economy is boost for Tory election prospects

Katja HallTory hopes of victory at the General Election have been boosted by businesses saying they expect the economy to strengthen this year.

The last three months showed steady growth which is expected to gather momentum over the next quarter, says the CBI.

Lower oil prices are helping keep firms’ costs down, although the stronger pound is hitting exporters.

The CBI’s Growth Indicator of 764 businesses brings together survey data from a range of sectors.

It shows stronger growth in the distribution (retail, wholesale & motor trades) and consumer services sectors in March, compared with the previous month.

This compensated for a weaker performance in manufacturing, where 11 of the 18 sub- sectors reported slowing growth since February, and in business & professional services where firms have been feeling the effect of stronger competition.

The overall reading of +18% for the three months to March shows that private sector growth was almost unchanged from the three months to February (+19%).

However, businesses expect growth to strengthen, driven in particular by a pick-up in business & professional and consumer services, and in the manufacturing sector.

The balance of expectations for business growth over the next three months (April – June) is +25%. That represents an increase on the +18% that was actually recorded in March but also still represents a significant scaling back of expectations compared with this time last year.

Katja Hall, CBI Deputy Director General, said: “The outlook for 2015 looks encouraging. Our surveys show it’s been a solid start to the year with the prospect of stronger growth to come. The benefits of lower oil prices should be increasingly felt; with cheaper petrol boosting households’ incomes and spending power, and cutting costs for many businesses.

“The main risk to the UK economy comes from the Eurozone, with continuing wrangling over Greece’s bailout package stoking uncertainty. Plus, many businesses will also have to contend with a stronger pound weighing down on already weak export growth.”

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