The UK economy is growing at its fastest pace for more than a decade, according to figures from the CBI. It said a survey of growth recorded in May gave the strongest reading since its data began in 2003.
The poll of 726 firms found a balance of plus 35% – the difference between those reporting higher output in the last three months and those saying it was lower. It was up from plus 25% in April.
It suggested the UK economy – which grew by 0.8% in the first three months of 2014 – had continued to perform strongly going into the second quarter, the CBI said.
The pace of growth was expected to remain above average, with a balance of plus 30% for expected output increase over the next three months.
The CBI highlighted strengthening indications of growth in retail sales as well as in business, professional and consumer services sectors. It said manufacturing output continued to grow at the same solid pace as the previous two months.
CBI deputy director-general Katja Hall said: “The UK economy is performing strongly thanks to rising business and consumer confidence, better credit conditions at home and improving global economic conditions.
“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.
“But 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.
“And with the eurozone crisis still far from being fully resolved, the UK continues to be exposed to a prolonged period of subdued activity in the region.”
Meanwhile, separate survey data from Markit showed households’ financial concerns for the coming year were topped by fears of a rising cost of living, energy bills and interest rates.
Some 17% of mortgage holders felt there would be a “very significant” impact from rising rates.
Households have also brought forward their expectations of when rates will be hiked, with 23% now expecting this in the next six months, the figures showed.
Elsewhere, the British Chambers of Commerce (BCC) upgraded its growth forecast for this year from 2.8% to 3.1% and for 2015 from 2.5% to 2.7%. It continues to expect 2.5% growth in 2016.
BCC director general John Longworth said: “Our forecast confirms that Britain is leading, rather than following, other major economies when it comes to short-term growth, which is great news.
“Businesses up and down the country should be congratulated for their hard work and determination in the face of many challenges over recent years. But make no mistake – we still have a lot of work to do.
“The task at hand is to ensure that 2014 is not ‘as good as it gets’ for the UK economy. Everything possible must be done to avoid slower growth in future. We need to invest, innovate, export and build.”