'Sharp rebound' anticipated for UK private sector as Britain's economy reopens

Suban Abdulla
·2 min read
Manufacturers reported broadly flat output (+3% from -8%) – the most positive balance for the sector since May 2019. Photo: Getty
Manufacturers reported broadly flat output (+3% from -8%) – the most positive balance for the sector since May 2019. Photo: Getty

Private sector activity in the UK is expected to "sharply rebound" in the next quarter as Britain's economy slowly opens up following the coronavirus pandemic.

According to the Confederation of British Industry (CBI), expectations for growth over the next three months are the strongest since February 2018. This is driven by predictions of above average growth in each main sector, CBI said.

The business group said that business and professional services are expected to grow by 32%, with manufacturers 30% — the highest expectation for growth since June 2015 and August 2017 respectively.

It comes as CBI's latest Growth Indicator revealed that private sector activity fell at the slowest pace in a year in the three months to March 2021.

A slower pace of growth is anticipated for consumer services (10%) and distribution firms (11%), but despite this it is the strongest expectations for these industries since January 2020 and February 2020 respectively.

The composite measure showed business & professional services declined to -5% from -21%, consumer services to -38% from -76% and distribution firms fell to -23% from -26%.

Meanwhile, manufacturers reported broadly flat output (3% from -8%). This was the most positive balance for the sector since May 2019, the group said.

The group which has been collecting workplace testing data as part of its economic surveys, urged the UK government and businesses to collaborate to ensure that firms have "clarity."

Image: CBI
Image: CBI

"Alongside the vaccine rollout, mass, rapid testing remains an essential pillar of the UK’s defences against the virus. As more of the economy emerges from lockdown, government and business will need to collaborate closer than ever to ensure companies have the clarity and guidance they need to successfully contribute to the recovery," John Foster, CBI director of policy and communications, said.

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CBI, which represents 190,000 businesses of all sizes and sectors in the UK, conducted the survey, based on 671 responses, between 24 February and 16 March this year.

Alpesh Paleja, CBI lead economist, said: "After a torrid year, our latest surveys show some light at the end of the tunnel – with the decline in activity across sectors slowing, and expectations of a rebound in growth over the next three months.

"Nonetheless many businesses are still struggling, especially the hardest hit including hospitality, retail, leisure and aviation. It’s likely that further targeted action will be required for aviation particularly, as the immediate outlook for the sector remains significantly challenging.

"More broadly, the UK and devolved governments ought to keep businesses close as the roadmap for reopening gets underway. Helping firms thrive once restrictions relax will be the best way of aiding the UK’s much-needed recovery."

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