Business investment will make a positive contribution to growth this year, rising at the fastest rate since 2007, according to the CBI.

Unveiling its new economic forecast, the UK’s leading business group is predicting GDP growth of 2.6% this year, up from its November forecast of 2.4%, which reflects a stronger-than-expected economic performance at the tail end of 2013. The CBI’s GDP forecast for 2015 is 2.5%, down slightly from 2.6% in November.

Business investment growth will rise from -3.7% in 2013 to 6.6% this year, and 8.3% in 2015, supported by improving confidence among firms and low borrowing costs.

Strong growth in manufacturing sector

The UK is a leading global manufacturer, with a world class reputation in the automotive, aerospace and pharmaceutical sectors. Manufacturing employs over 2m people, contributes £140bn to the UK’s economy each year, is responsible for over 70% of UK R&D investment and accounts for over 50% of our exports.
According to the latest CBI Industrial Trends Survey, manufacturing order books remained robust and output growth accelerated in February.

The survey of 380 manufacturers found that total order books improved slightly on January, although they remained below levels recorded in November and December. Overall export orders also rebounded after a drop in January. The motor vehicles sector was the biggest contributor to the improvement in export orders, recording its strongest performance since October 2011.

Output grew at one of the strongest rates since survey records began in 1975. Optimism about output prospects also improved, with expectations for output growth over the coming three months at their strongest since September – 16 out of 17 sectors expect output to expand over the next three months.

Key Findings:

In the survey, 26% of firms reported that total order books were above normal in February and 23% said they were below giving a balance of +3%, an increase from January (-2%) and well above the long-run average (-17%), although below the levels in December (+12%).  18% said their export order books were above normal and 19% said they were below normal giving a balance of -1%, well above the long-run average (-20%).  41% of firms said the volume of output was up and 17% firms said it was down, giving a balance of +24%, an increase from +18% in January’s survey

Firms expect output to continue to grow with 37% expecting output to increase over the next three months and 8% expecting orders to decrease, giving a rounded balance of +28%

Output price expectations remained elevated (+17%) although marginally below January’s figure (+20%). 22% stated average prices at which domestic orders are booked were up and 5% said they were down.  Stock adequacy of finished goods (+10%) remained a little below average (+14%).

999Automation is part of a leading UK supplier of manufacturing automation products