UK growth set to slow, says CBI

The UK economy is on track to post another strong quarter of growth, but at a slower pace than that enjoyed during early 2014, according to a leading survey of UK businesses.

The Confederation of British Industry’s (CBI) growth indicator fell to +19pc in February, indicating that a majority of the 824 firms surveyed by the lobby group remained positive about the UK economy during the last three months but felt less confident than previously.

The tick down reflected a slowdown in the retail industry, which had been offset slightly by a rise in manufacturing and services, the CBI said. Grocers and department stores have been especially hard hit, but nonetheless remain confident about their near-term prospects, the CBI reported.

Rain Newton-Smith, director of economics at the CBI, said the survey showed that “the economy is heading steadily along the right track.”

While lower than the +23pc reported in January, the CBI said that the February reading was “in line with the average rate over the past four months”. The indicator averaged close to +25pc over the course of last year.

^{Source: Capital Economics}

Looking forward, the CBI’s outlook indicator also fell, dropping from +28pc in January to +26pc in February. The signs that private sector growth is set to slow in the next three months came as economists anticipate that the UK will perform more strongly overall in the first quarter of the year.

Despite a slowdown in GDP growth to 0.5pc in the final quarter of last year, economists polled by Bloomberg believe that output will rise by 0.6pc in the first and second quarter of 2015. At such a pace the UK would easily outperform the “sluggish” eurozone.