BRITAIN’S battered economy could be getting back on its feet at long last, with glimmers of hope offered by healthier manufacturing numbers and GDP forecasts yesterday.
The economy has shrugged off fears of a triple-dip recession, jumping 0.8 per cent in the three months to April according to estimates from the National Institute for Economics and Social Research (NIESR).
The Bank of England may also think the UK’s prospects are looking up as it decided against more money printing yesterday, and kept rates on hold yet again, despite outgoing governor Sir Mervyn King backing more easing in recent months.
A return to modest growth should ease the pressure on public finances – the government has been struggling to rein in Britain’s huge levels of borrowing as the economy has flatlined, holding down tax revenues.
And the chancellor will also hope the new growth spurt can cut unemployment, which edged up again in February after months of decline.
The dominant private services sector, industry and public services all expanded in the last three months, with only agriculture and construction still dragging on the recovery.
The manufacturing sector expanded 1.1 per cent in March, the Office for National Statistics believes, sparking further hopes that the thaw could be widespread.
Following growth of 0.7 per cent in February that is the first time the manufacturing sector has grown in two consecutive months since 2011.
Some sectors like computing and electronics manufacturing saw output soar up 5.5 per cent on the month, followed by electrical equipment output which rose 3.8 per cent.
There is still cause to be cautious – some of the rebound in growth has come from North Sea oil and gas production coming back on line after downtime at the end of last year.
And NIESR believes it will take until 2015 before the economy grows back to the same level as its 2008 peak.
But it still represents an important growth spurt at the fastest expansion since the Olympic boom last summer.
“The manufacturing sector is on course to make a strong positive contribution to GDP growth in the second quarter,” said economist Nida Ali from Ernst and Young’s Item Club.
“Given that services activity appears firm, there is a good chance that second quarter growth could even be stronger than the first. However, the underlying picture is still fragile, with weak Eurozone demand likely to continue to plague UK manufacturers.”
Sectors like textiles and leather manufacture, and food, beverage and tobacco both saw declines in output in the month, indicating not every part of the economy is performing strongly.