Britons splash out on holidays in boost for UK economy
Consumers splashing out on holidays has helped put Britain’s economy on track to avoid predictions of a contraction in the first three months of the year, paving the way for the Bank of England to raise interest rates next month.
The latest monthly snapshot from S&P Global and the Chartered Institute of Procurement and Supply (Cips) showed the fastest rebound in private sector output in a year, fuelled by rising spending on travel, leisure and entertainment.
Chris Williamson, the chief business economist at S&P Global Market Intelligence, said the report indicated the economy grew by 0.4% in the first quarter.
That would be a much stronger performance than predicted by the Bank of England, which has forecast the UK economy would contract by 0.1% between January and March, as households and businesses come under growing pressure from the highest levels of inflation for four decades. The figure will be published by the Office for National Statistics next month.
A 12th consecutive interest rate increase at the Bank’s next meeting on 11 May was “an increasingly done deal”, Williamson added. “The key takeaway is that the economy as a whole is not only showing encouraging resilience but has gained growth momentum heading into the second quarter.”
The monthly survey of 1,300 service sector and manufacturing firms, which is closely watched by the Bank and the Treasury, showed pockets of resilience in the economy despite the cost of living crisis.
The flash composite purchasing managers index, compiled from firms’ survey responses on current economic conditions, rose from 52.2 in March to 53.9 in April, the highest level for 12 months. A reading of 50.0 separates private sector growth from contraction.
The figures come after the boss of
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