Business leaders have predicted that the UK economy will grow at a ‘modest pace’ in 2017 due to strong performances from manufacturing and service firms.
Despite the cost pressures of the Brexit-hit pound, the British Chamber of Commerce revealed that manufacturing firms witnessed a rise in domestic sales with transactions shifting from plus 13% to 15% in the fourth quarter.
Meanwhile, the services sector also saw a jump rising from 9% to plus 15% over the same period. Activity in the construction industry expanded at its fastest in nine months at the end of last year.
However, the BCC’s quarterly economic survey warned that firms were facing mounting pressure to hike prices as higher import costs were setting in because of the sterling’s slump. The balance of manufacturing firms expecting the price of goods and services to rise over the next three months hit its highest level on record, rising from plus 31% to plus 52%. The services sector also soared to levels not seen since the first quarter of 2011, stepping up from plus 20% to plus 30%.
Dr Adam Marshall, director general of the BCC, said inflation had emerged as a key concern for many businesses. He added: ‘Both manufacturing and services firms say they are under pressure, particularly from the rising cost of inputs, which is squeezing margins and may weaken future investment. Overall, our findings suggest growth will continue in 2017, albeit at a more modest pace.’