Construction at its highest level for 5 years

Activity in the construction industry reached a 21 month high this March as orders for new construction grew at their fastest rate for nearly 5 years. The index which measures the growth of the industry rose significantly from February to March which suggests that the construction industry is on the path to recovery. The manufacturing sector also saw significant levels of growth in the same period.

It is believed that at the end of last year, one of the reasons why the economy contracted again, was largely because of the manufacturing and construction industries. This raised fears that the country would slip back into recession but fortunately these growth figures suggest that this won’t be happening. Despite growth being much better than before, a group of business experts have recently said that the growth is simply not enough to keep the UK economy growing.

The British Chambers of Commerce, recently issued their economic assessments, which they do on a quarterly basis. They stated that it is unlikely the UK will slip back into a recession this year, but the economy’s expansion is going to be very slow at just 0.6 percent.

However, the Office for Budget Responsibility estimates that this growth figure will be slightly higher at closer to 0.8 percent. One of the reasons why the growth in the overall economy is so slow is because the service sector is still struggling, which makes up around 75 percent of the entire economy.

Although the BCC predicted slow growth figures, they have said that it is a welcome change from the final quarter of last year where growth figures were very poor. Despite these promising figures a recent survey of nearly 8000 businesses has shown that cash flow is still a significant problem for them. The fact that the price of food and oil is rising so quickly is causing a real affordability issue for many businesses. Furthermore, they are faced with the challenge of the Eurozone crisis which is significantly affecting confidence in the country.

Although the economy is going to grow, unemployment is still going to rise and it is estimated that by the end of the year nearly three million people in the country will be unemployed. The BCC have been lobbying the government in order to introduce measures that will allow businesses to grow with out the restrictions sometimes seen in their industries.

Business tax this month is going to be increasing and this is likely to cause a cash flow problem for a great many companies. The director-general of the BCC is John Longworth and he has commented, “It is good to see that the UK economy is recovering, but the recovery is simply far too slow. The UK has a great amount of potential still and the government need to set small businesses free so they can boom. Policies must be enacted that allow small businesses to invest more, create jobs and export their products. Businesses are essential for driving forward this recovery and the government must recognise this.”